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    Business: Process Costing System

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    The decision was made to use a process costing system. The first month of operation went fairly smoothly, and the CFO is ready to prepare her journal entries, but asked for your help because she has not done this before for a manufacturing company.

    Data for month ending 1/31/200X

    Direct labor expended on jobs completed in month 1 $100,000

    Direct material used up $500,000

    Budgeted manufacturing overhead $2,000,000

    Budgeted production volume 4,000 units

    Actual production volume 4,500 units

    Supplies, indirect labor, maintenance repair costs totaled $2,200,000

    Beginning work in process inventory 0

    Ending work in process inventory 0

    Using only the data in the chart, prepare the proper journal entries—including a date and notes showing any calculation to record the following:
    Direct material going into the work in progress (WIP) account
    Manufacturing overhead all being credited to accounts payable

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    Solution Summary

    This solution illustrates how to make process cost accounting journal entries.