Q. 17-22E-a - Horngren'S Financial And Managerial Accounting

Question

June production generated the following activity in Bentley Chassis Company’s Work-in-Process Inventory account:

June 1 balance	\(36,000
Direct materials used	32,000
Direct labor assigned to jobs	40,000
Manufacturing overhead allocated to jobs	28,000

Additionally, Bentley Chassis has completed Jobs 142 and 143, with total costs of

\)37,000 and $48,000, respectively.

Requirements

1. Prepare the journal entry for production completed in June.

Step-by-Step Solution

Answer

Date	Particulars	Debit($)	Credit ($)
	Finished goods inventory	85,000
	Work in process inventory		85,000

Finished goods inventory

Finished goods inventory means the inventory which is completed in manufacturing in all aspects. The goods which are ready to sale in the market is known as the finished goods.

Finished goods inventory

$$\begin{gathered} \mathbf{finished}\mathbf{ }\mathbf{goods}\mathbf{ }\mathbf{=}\mathbf{ }\mathbf{total}\mathbf{ }\mathbf{cost}\mathbf{ }\mathbf{of}\mathbf{ }\mathbf{job}\mathbf{ }\mathbf{142}\mathbf{ }\mathbf{+}\mathbf{ }\mathbf{ }\mathbf{total}\mathbf{ }\mathbf{cost}\mathbf{ }\mathbf{of}\mathbf{ }\mathbf{job}\mathbf{ }\mathbf{143} \\ \mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{=}\mathbf{\$}\mathbf{37}\mathbf{,}\mathbf{000}\mathbf{+}\mathbf{\$}\mathbf{48}\mathbf{,}\mathbf{000} \\ \mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{=}\mathbf{\$}\mathbf{85}\mathbf{,}\mathbf{000} \end{gathered}$$

When the production is completed, the company records it by debiting the finished goods inventory with the amount of total cost incurred on production and by crediting the work in process account.