Question

Dazzle, Inc. produces beads for jewelry making use. The following information summarizes production operations for June. The journal entry to record June production activities for direct labor usage is:
Direct materials used $ 99,000
Direct labor used 172,000
Predetermined overhead rate (based on direct labor) 160 %
Goods transferred to finished goods 444,000
Cost of goods sold 456,000
Credit sales 822,000
A. Debr Factory Wages Payable $172.000. credit Cash $172.000.
B. Debit Work in Process Inventory $72.000 credit Factory Wages Payable $172,000
C. Debir Cost of Goods Sold $172,000 credit Factory Wages Payable $172,000
D. Debit Work in Process Inventory $172,000 credit Raw Materials inventory $172.000.
E. Debe Work in Process Inventory $172.000; Credit Cash $172.000.

Answer 1

Answer:

The option (B) Debit Work in Process Inventory $72.000 credit Factory Wages Payable $172,000 is correct

Explanation:

Solution

Given that:

As the cost of labor was sustained as regards to processing the inventory and it was not completed, so debit the work in process of account.

There also exits a liability of paying labor charges for this it will be payable.

Hence credit factory wages payable.

For the other options they are crediting cash which is not yet paid, here the option A  and E is wrong.

For option D, they are crediting inventory which in this case is not correct due to the existence of a liability for paying labor fees.

The option D is wrong, because they debited with the cost of sold goods.