Forest Components makes aircraft parts. The following transactions occurred in July:

Purchased $16,880 of materials on account.
Issued $16,860 in direct materials to the production department.
Issued $1,360 of supplies from the materials inventory.
Paid for the materials purchased in transaction (1) using cash.
Returned $2,040 of the materials issued to production in (2) to the materials inventory.
Direct labor employees earned $31,400, which was paid in cash.
Paid $17,220 for miscellaneous items for the manufacturing plant. Accounts Payable was credited.
Recognized depreciation on manufacturing plant of $35,400.
Applied manufacturing overhead for the month.

Forest uses normal costing. It applies overhead on the basis of direct labor costs using an annual, predetermined rate. At the beginning of the year, management estimated that direct labor costs for the year would be $435,100. Estimated overhead for the year was $431,145.
The following balances appeared in the inventory accounts of Forest Components for July:

Beginning Ending
Materials Inventory ? $12,480
Work-in-Process Inventory ? 10,600
Finished Goods Inventory $2650 $6,960
Cost of Goods Sold ? 73,700

1 Materials inventory 16,880
Accounts payable 16,880
2 Work-in-process—direct materials 16,860
Materials inventory 16,860
3 Manufacturing overhead control 1,360
Materials inventory 1,360
4 Accounts payable 16,880
Cash 16,880
5 Materials inventory 2,040
Work-in-process—direct materials 2,040
6 Work-in-process—direct labor 31,400
Cash 31,400
7 Manufacturing overhead control 17,220
Accounts payable 17,220
8 Manufacturing overhead control 35,400
Accumulated depreciation—plant 35,400
9 Work-in-process—overhead 27,946
Applied manufacturing overhead 27,946

Required: Prepare T-accounts to show the flow of costs during the period from Materials Inventory through Cost of Goods Sold.

Raw MaterialsDebit  Credit

Beginning balance$12, 480Journal 2$16, 860

Journal 1  $16, 880  

Journal 5$2, 040Balance b/d$14, 540

$31, 400  $31, 400

Ending balance  $14, 540  

Work in Process  Debit  Credit

Beginning balance$10, 600Journal 5$2, 040

Journal 2$16, 860  

Journal 9$27, 946Balance b/d  $84, 766

Journal 6$31, 400  

$86, 806  $86, 806

Ending balance  $84, 766  

Finished GoodDebit  Credit

Beginning balance$2, 650Cost of goods sold$73, 700

Work in process$78, 010  

 Balance b/d$6, 960

$80, 660  $80, 660

Ending balance$6, 960  

Cost of Goods SoldDebit  Credit

Finished Goods$73, 700Income Summary$73, 700

Explanation:

Before we can prepare the inventory ledger accounts, we have to record journal entries of the transactions so that it may be easy to arrive at the balances of the accounts.

1.Dr Raw materials inventory  $16, 880

Cr Accounts payable  $16, 880

To record the raw material purchases

2.Dr Work in process inventory$16, 860

Cr Raw materials inventory$16, 860

To record direct materials issued to the production department

3.Dr Supplies  $1, 360

Cr Raw materials inventory$1, 360

To record supplies issued

4.Dr accounts payable  $16, 880

Cr cash  $16, 880

To record the payment of the materials purchased on account

5.Dr Raw materials inventory$2, 040

Cr Work in process inventory $2, 040

To record inventory returned by the production department

6.Work in process inventory  $31, 400

Cr Cash  $31, 400

To record the payment of direct labor

7.Dr factory overhead  $17, 220

Cr Accounts payable$17, 220

To record miscellaneous items purchased for the manufacturing plant

8.Dr Factory overhead$35, 400

Cr Accumulated depreciation$35, 400

To record depreciation on the manufacturing plant

9.Dr work in process inventory  $27, 946

Cr Factory overhead  $27, 946

To record overhead cost applied in July

We can now prepare the inventory ledger accounts

Raw MaterialsDebit  Credit

Beginning balance$12, 480Journal 2$16, 860

Journal 1  $16, 880  

Journal 5$2, 040Balance b/d$14, 540

$31, 400  $31, 400

Ending balance  $14, 540  

Work in Process  Debit                            Credit

Beginning balance$10, 600Journal 5$2, 040

Journal 2                 $16, 860  

Journal 9                 $27, 946   Balance b/d  $84, 766

Journal 6                 $31, 400  

$86, 806  $86, 806

Ending balance  $84, 766  

Finished Good       Debit                                           Credit

Beginning balance$2, 650Cost of goods sold$73, 700

Work in process         $78, 010  

 Balance b/d$6, 960

$80, 660  $80, 660

Ending balance$6, 960  

Cost of Goods SoldDebit                                    Credit

Finished Goods     $73, 700      Income Summary$73, 700

answer; blank (1) hrm specialists,blank(2); line managers;

answer; /// blank(1); increases; blank(2); decreases;