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Q29E

Expert-verified
Horngren'S Financial And Managerial Accounting
Found in: Page 1016

Short Answer

Hartley Company has a production process that involves three processes. Units move through the processes in this order: cutting, stamping, and then polishing. The company had the following transactions in November:

1. Cost of units completed in the Cutting Department, $17,000

2. Cost of units completed in the Stamping Department, $30,000

3. Cost of units completed in the Polishing Department, $35,000

4. Sales on account, $50,000

5. Cost of goods sold is 80% of sales

Prepare the journal entries for Hartley Company.

The journal entries to record the transfer of cost from one department to another, sales of the units, and the cost of goods sold are shown in step 2.

The cost of goods sold is $50,000.

See the step by step solution

Step by Step Solution

Step-by-Step Solution:Step 1: Manufacturing Process

The manufacturing process converts the raw material by applying the conversion cost into the finished product, and the company can sell that finished product in the market.

Step 2: Journal entries to record the transactions

Date

Particulars

Debit ($)

Credit ($)

1.

Work-in-process inventory – Stamping department

17,000

Work-in-process inventory – Cutting dept.

17,000

2.

Work-in-process inventory-Polishing department

30,000

Work-in-process inventory-Stamping dept.

30,000

3.

Finished goods inventory

35,000

Work-in-process inventory-Polishing dept

35,00

4.

Account receivable

50,000

Sales revenue

50,000

5.

Cost of goods sold (80% of $50,000)

40,000

Finished goods inventory

40,000

Step 3: Cost of goods sold

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