Lutz Company produces a product in two departments: (1) Mixing and (2) Finishing. The company uses a process cost accounting system. (a) Purchased raw materials for $50,000 on account. (b) Raw materials requisitioned for production were: Direct materials Mixing department $20,000 Finishing department 14,000 (c) Incurred labor costs of $74,000. (d) Factory labor used: Mixing department $44,000 Finishing department 30,000 (e) Manufacturing overhead is applied to the product based on machine hours used in each department: Mixing department-400 machine hours at $30 per machine hour. Finishing department-500 machine hours at $20 per machine hour. (f) Units costing $56,000 were completed in the Mixing Department and were transferred to the Finishing Department. (g) Units costing $70,000 were completed in the Finishing Department and were transferred to finished goods. (h) Finished goods costing $40,000 were sold on account for $55,000.

Answer and Explanation:

The Journal entries are shown below:-

a. Raw materials inventory Dr, $50,000

       To Accounts Payable $50,000

(Being purchase of raw material is recorded)

b. Work in process - mixing Dr, $20,000

Work in process - finishing Dr, $14,000

        To Raw materials inventory $34,000

(Being work in process is recorded)

c. Factory labor Dr, $74,000

      To Wages payable $74,000

(Being labor cost incurred is recorded)

d. Work in process - mixing Dr, $44,000

Work in process - finishing Dr, $30,000

            To Factory labor $74,000

(Being factor labor used is recorded)

e. Work in process - mixing Dr, $12,000 (400 × $30)

Work in process - finishing $10,000 (500 × $20)

          To Manufacturing overhead $22,000

(Being manufacturing overhead applied is recorded)

f. Work in process - finishing Dr, $56,000

          To Work in process - mixing $56,000

(Being completed is recorded)

g. Finished goods Dr, $70,000

         To Work in process - finishing $70,000

(Being is recorded)

h. Accounts receivable Dr, $55,000

          To Sales revenue $55,000

(Being sales is recorded)

Cost of goods sold Dr, $40,000

         To Finished goods $40,000

(Being cost of goods sold is recorded)

answer; foreign exchange transaction;