Major league back company manufactures baseball bats. In addition to its work in process inventory, the company maintains inventories of raw materials into finished goods. It uses raw materials as direct materials in production and as indirect materials. It’s factory payroll cost include direct labor for production and indirect labor. All materials are added at the beginning of the process and conversion costs are applied uniformly throughout the production process. 

REQUIRED:
You are to maintain records and produce measures of inventories to reflect the July events of this company. The June 30 balances: Raw Materials Inventory, $34,000; Work in Process Inventory, $10,220 ($3,410 of direct materials and $6,810 of conversion); Finished Goods Inventory, $150,000; Sales, $0; Cost of Goods Sold, $0; Factory Wages Payable, $0; and Factory Overhead, $0.

1. Prepare journal entries to record the following July, transactions and events.
1A. Purchased raw materials for $190,000 cash (the company uses a perpetual inventory system).
1B. Used raw materials as follows: direct materials, $55,090; and indirect materials, $17,500.
1C. Recorded factory wages, payable costs as follows: direct labor, $221,000; and indirect labor, $32,500.
1D. Paid factory payroll cost of $253,500 with cash (ignore taxes).
1E. Incurred additional factory overhead costs of $95,000 paid in cash.
1F. Applied factory overhead to production at 50% of direct labor costs.

2. Information about the July inventory follows. Use this information with that from part one to repair a process cost summary, assuming the weighted average method is used. (round “cost per EUP” to two decimal places.)

Units
Beginning inventory —> 10,500 units
Started —> 12,000 units
Ending inventory —> 6000 units
Beginning inventory
Materials-Percent complete —> 100%
Conversion-Percent complete —> 80%
Ending inventory
Materials-Percent complete —> 100%
Conversion-percent complete —> 40%
3. Using the results from part two in the available information, make computations and prepare journal entries to record the following:
3G. Total cost transferred to finished goods for July.
3H. Sale of finished goods costing $303,200 for $700,000 in cash.
4. Post entries from parts one and three to the following general ledger accounts.
5. Compute the amount of gross profit from the sales in July. (hint: add any under applied overhead to, or deduct any overapplied overhead from, the cost of good sold)