Reference no: EM132618931

Squeaky Clean Products Ltd. also has a second factory in Duncan that makes commercial vacuums. For July there were no beginning inventories of direct materials, and no beginning or ending work-in-process. Only one indirect manufacturing cost category is currently in use, "Conversion Costs." Squeaky Clean Products Ltd. records direct materials purchased at actual costs. No conversion costs are inventoried.

Squeaky Clean Products Ltd. uses backflush costing. Journal entries are recorded when materials are purchased and when units are sold. Variances are written off against Cost of Goods Sold when units are sold. The following data pertains to July:

Conversion costs - July                      $360,000

Direct materials purchased - July          $800,000

Units produced - July                           100,000

Units sold - July                                   92,000

Conversion cost allocated                      $326,600

Required:

Problem 1: Prepare the journal entries to reflect Squeaky Clean's purchase of direct materials and conversion costs incurred. (4 marks - show your work and calculations)

Problem 2: Prepare the journal entries to reflect Squeaky Clean's sale of finished goods.