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Chapter 18: Q18RQ (page 1006)

Explain the additional journal entries required by process costing systems that are not needed in job order costing systems.

Short Answer

Expert verified

The journal entry which is required in process costing system but not required in the job order costing system is:

Date

Particulars

Debit ($)

Credit ($)

WIP Inventory 鈥� Department 1

XXX

WIP Inventory 鈥� Department 2

XXX

(Transfer of units from one department to another department)

Step by step solution

01

Step-by-Step Solution:Step 1: Process Costing System

A process costing system is used to determine the manufacturing cost of the product, which passes from more than one process. It determines the cost of manufacturing for every process.

02

The separate journal entry passed in the process costing system

Journal entry passed when the inventory completed in the department transferred to another department. It is recorded by debiting the WIP inventory of the department receiving the units and crediting the WIP inventory of the department transferring the units.

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Most popular questions from this chapter

Question: What are conversion costs? Why do some companies using process costing systems use conversion costs?

Question: What are the primary differences between job order costing systems and process costing systems?

Refer to Short Exercise S18-5. At Spring Fresh, water is added at the beginning of the filtration process. Conversion costs are added evenly throughout the process. Now assume that in February, 155,000 liters were completed and transferred out of the Filtration Department into the Bottling Department. The 45,000 liters remaining in Filtration鈥檚 ending Work-in-Process Inventory were 80% of the way through the filtration process. Recall that Spring Fresh has no beginning inventories.

Compute the equivalent units of production for direct materials and conversion

costs for the Filtration Department.

When might it be beneficial for a company to use the FIFO method? When is the weighted-average method more practical?

The comparative financial statements of Norfolk Cosmetic Supply for 2018, 2017, and

2016 include the data shown here:

2018 2017 2016

Balance sheet鈥攑artial

Current Assets:

Cash

Short-term investments

Accounts Receivable, Net

Merchandise Inventory

Prepaid Expenses

Total Current Assets

Total Current Liabilities

Income statement鈥攑artial

Net Sales (all on account)

\( 70,000

140,000

280,000

355,000

70,000

915,000

560,000

5,890,000

\) 60,000

170,000

240,000

330,000

35,000

835,000

630,000

5,130,000

$ 50,000

120,000

260,000

310,000

35,000

775,000

640,000

4,210,000

Requirements

1. Compute these ratios for 2018 and 2017:

a. Acid-test ratio (Round to two decimals.)

b. Accounts receivable turnover (Round to two decimals.)

c. Days鈥� sales in receivables (Round to the nearest whole day.)

2. Considering each ratio individually, which ratios improved from 2017 to 2018 and

which ratios deteriorated? Is the trend favorable or unfavorable for the company?
See all solutions

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