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Example (1) JIT

Senan CO. manufactures 'Sweet Melody Lotion' and had various transactions in March 2020, including $1,000,000 in raw material purchases and $300,000 in labor costs. The document outlines journal entries for traditional costing and back flush costing using different trigger points for purchases, completion of goods, and sales. The standard cost per unit is $34.80, with specific entries for materials, conversion costs, work in process, finished goods, and cost of goods sold.

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4 views5 pages

Example (1) JIT

Senan CO. manufactures 'Sweet Melody Lotion' and had various transactions in March 2020, including $1,000,000 in raw material purchases and $300,000 in labor costs. The document outlines journal entries for traditional costing and back flush costing using different trigger points for purchases, completion of goods, and sales. The standard cost per unit is $34.80, with specific entries for materials, conversion costs, work in process, finished goods, and cost of goods sold.

Uploaded by

nassif.jassim.mohmmadali
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

EXAMPLE (1) :- Page 288

Senan CO. manufactures a product known as “Sweet Melody Lotion”. The transactions for the
month of March 2020 were as follows
Purchase of raw materials $1,000,000
Labor/Wages incurred 300,000
Factory overhead incurred 400,000
Units completed 50,000 units
Units sold 49,900 units
There are no beginning inventories of raw materials, work in process and finished goods. The
standard cost per unit of output is $ 34.80 ($ 19.80 for raw materials and $ 15 for conversion
costs, of which $ 6 is for labor cost.
Required: Prepare the journal entries if:
a. Using Traditional costing
b. Back flush costing using three trigger points (purchases, completion of goods and upon
sale)
c. Back flush costing using two trigger points (purchase and upon sale)
d. Back flush costing using two trigger points (completion of goods and upon sale)
(a- Traditional costing) b- three trigger points (purchases, c-two trigger points (purchase and sale)
completion , sale)

stage NO. Accounts


entry

(A) A1 Materials inventory 1,000,000 RIP inventory 1,000,000 M&IP inventory 1,000,000
purchases Accounts payable 1,000,000 Accounts payable 1,000,000 Accounts payable 1,000,000
Record DM purchased Record DM purchased Record DM purchased
A2 Conversion costs control 700,000 Conversion costs control 700,000 Conversion costs control 700,000
Accrued Payroll 300,000 Accrued Payroll 300,000 Accrued Payroll 300,000
Various accounts 400,000 Various accounts 400,000 Various accounts 400,000
Record conversion costs Record conversion costs Record conversion costs
(B)begin of B1 Work in Process inventory 1,740,000 NO entry No entry
production Materials inventory 990,000
Conversion costs applied 750,000
50,000 unit@ $34.80,($19.80,and$15)
Record production resulting in work in
process
(c) C1 Finished goods Control 1,740,000 Finished goods Control 1,740,000 No entry
completion WIP Control 1,740,000 RIP inventory 990,000
of goods Record cost of finished units completed Conversion costs applied 750,000

Record cost of finished units completed


(D) sale D1 Cost of goods sold 1,736,520 COGS 1,736,520 COGS 1,736,52O
Finished goods control 1,736,520 F G Inventory 1,736,520 RIP Inventory control 988,020
Record cost of goods sold Record cost of goods sold C C Applied 748,500
( 49,900x34.80) ( 49,900x34.80) ( 49,900 unit x $ 19.80& 49,900x15)
Record cost of finished goods sold

D2 Conversion costs applied 750,000 CC applied 750,000 C C Applied 748,500


Conversion costs control 700,000 CC control 700,000 C C control 700,000
Cost of goods sold 50,000 COGS 50,000 COGS 48,500

Record under -applied or over- Record under -applied or over-


applied conversion costs applied conversion costs

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