Question

Mulligan, Inc., which uses a process-cost accounting system, passes completed production from Department A to Department B for further manufacturing. The journal entry to record completed production in Department A requires:
a. a debit to Finished-Goods Inventory and a credit to Work-in-Process Inventory: Department A.
b. a debit to Finished-Goods Inventory and a credit to Work-in-Process Inventory.
c. a debit to Work-in-Process Inventory and a credit to Finished-Goods Inventory.
d. a debit to Work-in-Process Inventory: Department B and a credit to Work-in-Process Inventory: Department A.
e. a debit to Work-in-Process Inventory: Department A and a credit to Work-in-Process Inventory: Department B.

Answer 1

Answer:

d. a debit to Work-in-Process Inventory: Department B and a credit to Work-in-Process Inventory: Department A.

Explanation:

The journal entry is shown below:

Work in progress inventory - Department B A/c Dr

           To Work in progress inventory - Department A A/c

(Being the completed production is recorded)

For recording, we debited the Work-in-Process Inventory - Department B Account and credited the Work-in-Process Inventory - Department A Account so that the correct posting can be done