The cost of materials transferred into the Rolling Department of Keystone Steel Company is $553,600 from the Casting Department. The conversion cost for the period in the Rolling Department is $107,500 ($64,300 factory overhead applied and $43,200 direct labor). The total cost transferred to Finished Goods for the period was $622,800. The Rolling Department had a beginning inventory of $27,900. Required:
a. Journalize the cost of transferred-in materials.
b. Journalize the conversion costs.
c. Journalize the costs transferred out to Finished Goods.

Keystone Steel Company

Journal Entries:

a. Debit Work in Process $553,600

Credit Transferred-in materials $553,600

To record the cost of transferred-in materials.

b. Debit Work in Process $107,500

Credit Factory overhead $64,300

Credit Payroll $43,200

To record the conversion costs.

c. Debit Finished Goods Inventory $622,800

Credit Work in Process $622,800

To record the costs transferred out to Finished Goods.

Explanation:

a) Data and Calculations:

Cost materials transferred into the Rolling Department = $553,600

Conversion cost for the period = $107,500

Factory overhead applied = $64,300

Direct labor = $43,200

Cost transferred to Finished Goods for the period = $622,800

Work in process, beginning inventory = $27,900

a. Work in Process $553,600 Transferred-in materials $553,600

b. Work in Process $107,500 Factory overhead $64,300 Payroll $43,200

c. Finished Goods Inventory $622,800 Work in Process $622,800

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