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Activity 2

The document provides information on backflush costing for three different companies - LanFat Manufacturing Company, ATM Manufacturing Company, and Clifton Manufacturing Company. It includes beginning and ending inventory balances for raw materials and work in process accounts, raw materials received, and estimated conversion costs. Journal entries are required to record the transactions for the raw materials and work in process inventory accounts.

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Kellyjean Intal
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881 views2 pages

Activity 2

The document provides information on backflush costing for three different companies - LanFat Manufacturing Company, ATM Manufacturing Company, and Clifton Manufacturing Company. It includes beginning and ending inventory balances for raw materials and work in process accounts, raw materials received, and estimated conversion costs. Journal entries are required to record the transactions for the raw materials and work in process inventory accounts.

Uploaded by

Kellyjean Intal
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Backflush Costing With a Finished Goods Account.

The LanFat Manufacturing Company uses a Raw and


In Process (RIP) inventory account and expenses all conversion costs to the cost of goods sold account. At
the end of each month, all inventories are counted, their conversion cost components are estimated, and
inventory account balances are adjusted accordingly. Raw material cost is backflushed from RIP to Finished
Goods. The following information is for the month of August:

Beginning balance for RIP account, including P4,800 of conversion cost................................... P 43,500
Raw materials received on credit................................................................................................. 680,000
Ending RIP inventory per physical count, including P5,300 conversion
cost estimate.......................................................................................................................... 47,200

Required: Prepare all journal entries involving the RIP account.

Backflush Costing With No Finished Goods Account. The ATM Manufacturing Company produces only for
customer order, and most work is shipped within twenty-four hours of the receipt of an order. ATM uses a
Raw and In Process (RIP) inventory account and expenses all conversion costs to the cost of goods sold
account. At the end of each month, inventory is counted, its conversion cost component is estimated, and
the RIP account balance is adjusted accordingly. Raw material cost is backflushed from RIP to Cost of
Goods Sold. The following information is for the month of June:

Beginning balance of RIP account, including P900 of conversion cost....................................... P 8,500


Raw materials received on credit................................................................................................. 187,000
Ending RIP inventory per physical count, including P1,100 conversion
cost estimate.......................................................................................................................... 7,900

Required: Prepare all journal entries involving the RIP account.

Backflush Costing; Entries in RIP and Finished Goods. The Clifton Manufacturing Company has a cycle
time of 1.5 days, uses a Raw and In Process (RIP) account, and charges all conversion costs to Cost of
Goods Sold. At the end of each month, all inventories are counted, their conversion cost components are
estimated, and inventory account balances are adjusted. Raw material cost is backflushed from RIP to
Finished Goods. The following information is for May:

Beginning balance of RIP account, including P600 of conversion cost....................................... P 5,500


Beginning balance of finished goods account, including P2,000 of
conversion cost...................................................................................................................... 6,000
Raw materials received on credit................................................................................................. 173,000
Ending RIP inventory per physical count, including P850 conversion
cost estimate.......................................................................................................................... 6,200
Ending finished goods inventory per physical count, including P1,550
conversion cost estimate........................................................................................................ 4,900

Required: Prepare all the journal entries that involve the RIP account and/or the finished goods account.

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