Compute the (a) cost of products transferred from weaving to sewing, (b) cost of products transferred from sewing to finished goods, and (c) cost of goods sold. 2. Prepare journal entries dated June 30 to record (a) goods transferred from weaving to sewing, (b) goods transferred from sewing to finished goods, (c) sale of finished goods, and (d) cost of goods sold

Question Completion:

The following information applies to Pro-Weave manufactures stadium blankets by passing the products through a weaving department and a sewing department. The following information is available regarding its June inventories:

                                                                 Beginning          Ending

                                                                  Inventory         Inventory

Raw materials inventory                        $ 120,000         $ 185,000

Work in process inventory-Weaving       300,000            330,000

Work in process inventory-Sewing        570, 000            700,000

Finished goods inventory                     1,266,000          1,206,000

The following additional information describes the company's manufacturing activities for June:

Raw materials purchases (on credit) $500,000

Factory wages cost (paid in cash) 3,060,000

Other factory overhead cost (other Accounts credited) 156, 000

Materials used:

Direct-Weaving  $ 240, 000

Direct-Sewing  75,000

Indirect  120,000

Labor used:

Direct-Weaving $1,200, 000

Direct-Sewing  360,000

Indirect 1,500,000

Overhead rates as a percent of direct labor:

Weaving Sewing

  80%      150%

Sales (on credit) $4,000,000

Pro-Weave

1. Computation of:

a) Cost of products transferred from Weaving to Sewing = $2,370,000

b) Cost of products transferred from Sewing to Finished Goods = $3,215,000

c) Cost of Goods Sold = $3,275,000

2. Journal Entries on June 30 to record:

(a) goods transferred from weaving to sewing

Debit WIP: Sewing $2,370,000

Credit WIP: Weaving $2,370,000

To transfer goods from weaving to sewing.

(b) goods transferred from sewing to finished goods

Debit Finished Goods Inventory $3,215,000

Credit WIP: Sewing $3,215,000

To transferred goods from sewing to finished goods.

(c) sale of finished goods, and

Debit Accounts Receivable $4,000,000

Credit Sales Revenue $4,000,000

To record the sale of goods on credit.

(d) cost of goods sold

Debit Cost of Goods Sold $3,275,000

Credit Finished Goods Inventory $3,275,000

To record the cost of goods sold.

Explanation:

a) Data and Calculations:

Items                                           Weaving           Sewing     Finished Goods

Beginning Inventory                $ 300,000       $570,000     $1,266,000

Direct materials                          240,000            75,000

Direct labor                              1,200,000          360,000

Overhead applied:

(1,200,000 * 80%)                      960,000

($360,000 * 150%)                                             540,000

Cost of Weaving                   $2,700,000                        

Less Ending Inventory               330,000  

Transferred to Sewing        ($2,370,000)     2,370,000

Total cost of Sewing                                      $3,915,000

Less Ending Inventory                                       700,000

Transferred to Finished Goods                  ($3,215,000)        3,215,000

Goods available for sale                                                        $4,481,000

Less Ending Inventory                                                             1,206,000

Cost of Goods Sold                                                              $3,275,000

Manufacturing overhead actually incurred:

Indirect materials  120,000

Indirect labor     1,500,000

Total incurred   1,620,000