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Are my journal entries correct? Please f...
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Are my journal entries correct? Please find the assignment attached. Thank you.
ACC-Week2.docx

P3-1B Buehler Company manufactures a nutrient, Everlife, through two manufacturing
processes: Blending and Packaging. All materials are entered at the beginning of each
process. On August 1, 2011, inventories consisted of Raw Materials $5,000, Work in
ProcessBlending $0, Work in ProcessPackaging $3,945, and Finished Goods $7,500.
The beginning inventory for Packaging consisted of 500 units, two-fifths complete as to
conversion costs and fully complete as to materials. During August, 9,000 units were
started into production in Blending, and the following transactions were completed.
1. Purchased $25,000 of raw materials on account.
2. Issued raw materials for production: Blending $18,930 and Packaging $9,140.
3. Incurred labor costs of $23,770.
4. Used factory labor: Blending $13,320 and Packaging $10,450.
5. Incurred $41,500 of manufacturing overhead on account.
6. Applied manufacturing overhead at the rate of $25 per machine hour. Machine hours
were Blending 900 and Packaging 300.
7. Transferred 8,200 units from Blending to Packaging at a cost of $44,940.
8. Transferred 8,600 units from Packaging to Finished Goods at a cost of $67,490.
9. Sold goods costing $62,000 for $90,000 on account.
Instructions
Journalize the August transactions.
GENERAL JOURNAL
P3-1B
Account Titles & Explanation
Debit
Credit
Aug-11
1
Raw Materials
25,000.00
Accounts Payable
25,000.00
2

3&4

5

6

7

WIP- Blending
WIP- Packaging
Raw Materials Inventory

18,930.00
9,140.00

WIP- Blending
WIP- Packaging
Factory Labor

13,320.00
10,450.00

Manufacturing Overhead
Accounts Payable

41,500.00

WIP- Blending
WIP- Packaging
Manufacturing Overhead
(To assign overhead to production)

22,500.00
7,500.00

WIP- Packaging
WIP- Blending

44,940.00

28,070.00

23,770.00

41,500.00

30,000.00

44,940.00

8

9

Finished Goods
WIP- Packaging

67,490.00

COGS
Finished Goods

62,000.00

Accounts Receivable
Sales

90,000.00

BYP2-2 In the course
of routine checking of
all journal entries
prior to preparing
yearend
reports, Diane Riser
discovered several
strange entries. She
recalled that the
presidents
son Ron had come in
to help out during an
especially busy time
and that he had
recorded
some journal entries.
She was relieved that
there were only a few
of his entries, and
even
more relieved that he
had included rather
lengthy explanations.
The entries Ron made
were:
1.
Work in Process
Inventory 25,000
Cash 25,000
(This is for materials
put into process. I
dont find the record

67,490.00

62,000.00

90,000.00

that we paid for these,
so Im crediting
Cash, because I know
well have to pay for
them sooner or later.)
2.
Manufacturing
Overhead 12,000
Cash 12,000
(This is for bonuses
paid to salespeople. I
know theyre part of
overhead, and I cant
find an account called
Non-factory
Overhead or Other
Overhead so Im
putting
it in Manufacturing
Overhead. I have the
check stubs, so I
know we paid these.)
3.
Wages Expense
120,000
Cash 120,000
(This is for the
factory workers
wages. I have a note
that payroll taxes are
$15,000.
I still think thats part
of wages expense,
and that well have to
pay it all in cash
sooner or later, so I
credited Cash for the
wages and the taxes.)
4.
Work in Process
Inventory 3,000
Raw Materials
Inventory 3,000
(This is for the glue
used in the factory. I
know we used this to

make the products,
even though we
didnt use very much
on any one of the
products. I got it out
of
inventory, so I
credited an inventory
account.)
Instructions
(a) How should Ron
have recorded each of
the four events?
(b) If the entry was
not corrected, which
financial statements
(income statement or
balance
sheet) would be
affected? What
balances would be
overstated or
understated?

BYP2-2
1

2

3

GENERAL JOURNAL
Account Titles &
Explanation
Debit
WIP
Raw Materials
Bonus ExpenseSales
Cash
Wages Expense
Tax Expense
Payroll

Credit

25,000.00
25,000.00
12,000.00
12,000.00
105,000.00
15,000.00
120,000.00

4

WIP
Manufacturing
Overhead

3,000.00
3,000.00

1. The first entry would have affected the balance sheet because it was crediting cash, when
Raw Materials
was actually the account that should have been credited. This would cause cash to be
understated on the
balance sheet.
2. This entry would have affected the income statement if it had not been corrected, since all
bonuses and payroll
are reported on the income statement.
3. This entry would also have affected the income statement, because all payroll related entries
are reflected on
the balance sheet.
4. This entry would have affected the balance sheet if it were not adjusted because all inventory
related items
are presented on the balance sheet.

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All of your answers look quite correct. I did do some minor editin... View the full answer

ACC-Week2.docx

P3-1B Buehler Company manufactures a nutrient, Everlife, through two manufacturing
processes: Blending and Packaging. All materials are entered at the beginning of each process.
On August 1, 2011,...

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