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

Short Answer

Question: Department 4 has completed production on units that have a total cost of $15,000. The units are ready for sale. Give the journal entry.




Debit ($)

Credit ($)

Finished goods inventory


WIP inventory


See the step by step solution

Step by Step Solution

Step 1: WIP inventory

The work in process inventory means the inventory which are under processing and are partially completed. It is the inventory which is currently in the production process at the end of the accounting period.

Step 2: Recording of the total cost when the production is completed

When the production is completed, the work in process inventory is transferred to the finished goods inventory by debiting the finished goods inventory account and by crediting the WIP inventory account.

Most popular questions for Business-studies Textbooks

PepsiCo, Inc. is a global food and beverage company that manufactures brands such as Frito-Lay, Gatorade, Pepsi-Cola, Quaker, and Tropicana. One of the products PepsiCo, Inc. manufactures is Mountain Dew. The first process in manufacturing Mountain Dew consists of clarifying the water to remove impurities such as organic materials and bacteria. The clarification process involves mixing the water with aluminum sulfate (an indirect material) to remove the impurities.

Assume PepsiCo uses the weightedaverage method of process costing.


1. During the month of June, the Clarification Department incurred the following costs in processing 100,000 liters:

Wages of workers operating the clarification equipment


Manufacturing overhead allocated to clarification




PepsiCo had no beginning Work-In-Process Inventory in the Clarification Department in June. Compute the June conversion costs in the Clarification Department.

2. Assume that water is added at the beginning of the clarification process and conversion costs are added evenly throughout the process. The Clarification Department completed and transferred out 60,000 liters during June. The 40,000 liters remaining in Clarification’s ending Work-in-Process Inventory were 100% complete for direct materials and 60% complete for conversion costs. Compute the equivalent units of production for direct materials and conversion costs for the Clarification Department.

3. Compute the cost per equivalent unit for direct materials and conversion costs for the Clarification Department.


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