Question

In December, Davis Company had the following cost flows:

Molding Department Grinding Department Finishing Department
Direct materials $112,100 $29,200 $16,900
Direct labor 8,100 13,300 11,900
Applied overhead 9,200 60,800 10,700
Transferred-in cost:
From Molding 129,400
From Grinding 232,700
Total cost $129,400 $232,700 $272,200
Required:
1. Prepare the journal entries to transfer costs from (a) Molding to Grinding, (b) Grinding to Finishing, and (c) Finishing to Finished Goods.
2. CONCEPTUAL CONNECTION: Explain how the journal entries differ from a job-order cost system.

Answer 1

Answer and Explanation:

1. The Journal entry is shown below:-

a. Work in process for Grinding department Dr, $129,400

           To Work in process for Molding department $129,400

(Being transfer the cost to the grinding department is recorded)

b. Work in process for Finishing department Dr, $232,700

            To Work in process for Grinding department $232,700

(Being transfer the cost to the finishing department is recorded)

c. Finished goods Dr, $272,200

          To Work in process-Finishing department $272,200

(Being transfer the cost to the finishing goods is recorded)

2. According to the job order costing, all cost is transferred on one time to the finished goods inventory plus there is no carry forward

On the other side, the process costing is the costing in which all the journal entries are interconnected with each type of department