Zang Co. manufacturs its products in a continuous process involving two departments, Machining and Assembly. The following transactions are related to production during June:

(a) Materials purchased (on June 1) on account, $180,000.

(b) Materials requisitioned by: Machining, $73,000 direct and $9,000 indirect materials; Assembly, $4,900 indirect materials.

(c) Direct labor used by Machining, $23,000; Assembly, $47,000.

(d) Depreciation expenses: Machining, $4,500; Assembly, $7,800.

(e) Factory overhead applied: Machining, $9,700; Assembly, $11,300.

(f) Machining Department transferred $98,300 to Assembly Department; Assembly Department transferred $83,400 to finished goods.

(g) Sold goods on account, $100,000; cost of goods sold, $68,000.

Answer and Explanation:

The Journal entry is shown below:-

1. Material Inventory Dr, $180,000

To Accounts Payable $180,000

(Being Material Purchased on account is recorded)

2. WIP Machining Dept. Dr, $73,000

Manufacturing Overheads Machining Dept. Dr, $9,000

Manufacturing Overheads Assembly Dept. Dr, $4,900

To Material Inventory $86,900

(Being Material issued to departments is recorded)

3. WIP Machining Dept. Dr, $23,000

WIP Assembly Dept. Dr, $47,000

To Wages Payable $70,000

(Being Direct Labor used is recorded)

4. Manufacturing Overheads Machining Dept. Dr, $4,500

Manufacturing Overheads Assembly Dept. Dr, $7,800

To Depreciation Expense $12,300

(Being Depreciation allocated is recorded)

5. WIP Machining Dept. Dr, $9,700

WIP Assembly Dept. Dr, $11,300

To Man. Overheads Machining Dept. $9,700

To Man. Overheads Assembly Dept. $11,300

(Being Factory overheads applied is recorded)

6. WIP Assembly Dept. Dr, $98,300

To WIP Machining Dept. $98,300

(Being WIP Transferred is recorded)

7. Finished Goods Inventory Dr, $83,400

To WIP Assembly Dept. $83,400

(Being Finished goods transferred is recorded)

8. Accounts Receivables Dr, $100,000

To Sales $100,000

(Being Goods sold on account is recorded)

9. Cost of Goods sold Dr, $68,000

To Finished Goods Inventory $68,000

(Being Goods sold is recorded)