Question

Harrington Industries, which uses a process-costing system, had a balance in its Work-in-Process account of $68,000 on January 1. The account was charged with direct materials, direct labor, and manufacturing overhead of $450,000 throughout the year. If a review of the accounting records determined that $86,000 of goods were still in production at year-end, Harrington should make a journal entry on December 31 that includes:

Answer 1

Answer:

The question is missing the below options:

a) a debit to Cost of Goods Sold for $432,000.

b) a debit to Finished-Goods Inventory for $86,000.

c) a credit to Work-in-Process Inventory for $432,000.

d) a credit to Work-in-Process Inventory for $86,000.

e) a credit to Finished-Goods Inventory for $432,000.

The correct option is C,a credit to Work-in-Process Inventory for $432,000.

Explanation:

$432,000 would credited to Work-in-Process Inventory as that is the value of finished goods inventory in the period.The debit goes to the finished goods inventory as goods manufactured in the period.The $432000 is calculated thus:

Opening Work-in-Process $68000

Manufacturing costs           $450000

Closing Work-in-Process    ($86000)

Finished goods                     $432000