Preparing journal entries-outputs hartley company has a production process that involves three processes. units move through the processes in this order. cutting, stamping, and then polishing. the company had the following transactions in november: 1. cost of units completed in the cutting department, $17,000 2. cost of units completed in the stamping department, $30,000 3. cost of units completed in the polishing department, $35,000 4. sales on account, $50,000 5. cost of goods sold is 80% of sales prepare the journal entries for hartley company.

(It is assume that completed unit have been transferred to next department)

The jounal entries for each transaction is given below.

Cost of units completed in the Cutting Department, $17,000

Debit WIP stamping Dept         $ 17,000

Credit WIP cutting Dept            $ 17,000

Cost of units completed in the Stamping Department, $30,000

Debit WIP polishing Dept              $ 30,000

Credit WIP stamping Dept            $ 30,000

Cost of units completed in the Polishing Department, $35,000

Debit Finished good                     $ 35,000

Credit WIP polishing Dept            $ 35,000

Sales on account, $50,000

Debit GOGS                          $ 40,000

Credit Finished good           $ 40,000

Debit Receivable Account   $ 50,000

Credit Sales                          $ 50,000

Cutting department journal entry Dr : finished good $17,000, Cr : work in process $17,000, Stamping department journal entry Dr: finished good $30000, Cr: work in process $30,000, polishing department journal entry Dr: finished good $35,000, Dr:work in process $35,000, sales on account journal entry Dr: Account Receivable $50,000, Cr: Sales $50,000,, cost of good sold journal entry Dr:cost of good sold $40,000, Cr: finished good $40,000

Explanation:

Cutting department journal entry

Account Name Dr. Cr

$ $

Finished good. 17,000

Work In process 17,000

Stamping department journal entry

Account Name Dr. Cr

$ $

Finished good. 30,000

Work In process 30,000

Polishing department journal entry

Account Name Dr. Cr

$ $

Finished good. 35,000

Work In process 35,000

Sales on Account journal entry

Account Name Dr. Cr

$ $

Account Receivable 50,000

Sales. 50,000

Cost of good sold journal entry

Account Name. Dr. Cr

$ $

Cost of good sold. 40,000

Finished good. 40,000

Working of cost of good sold

80% of sales

= 80÷100 = 0.8

= 0.8 × 50,000

=40,000

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