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Q,18-19RQ

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Horngren'S Financial And Managerial Accounting
Found in: Page 1006

Short Answer

Question: Department 1 is transferring units that cost $40,000 to Department 2. Give the journal entry.

Answer

Date

Particulars

Debit ($)

Credit ($)

Work in process inventory-Department 2

40,000

Work in process inventory-Department 1

40,000

See the step by step solution

Step by Step Solution

Step 1: WIP inventory

The work in process inventory is defined as the inventory which are not fully completed and are not ready for sale. It is considered as the current asset in the company’s balance sheet.

Step 2: Transfer entry of units from one department to another department

While manufacturing the products, when the units are transferred to another department for processing, the work in process inventory of the department transferring the units is credited and the work in process inventory of the receiving department is debited.

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