Question

Hornsby has a single production department, and uses a process-costing system. The balance in its Work-in-Process account on January 1 was $68,000. 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, Hornsby should make a journal entry on December 31 that includes: a debit to Finished-Goods Inventory for $86,000. a debit to Finished-Goods Inventory for $432,000. a debit to Cost of Goods Sold for $432,000. a credit to Work-in-Process Inventory for $86,000. a debit to Work-in-Process Inventory for $432,000.

Answer 1

Answer: A debit to Work-in-Process Inventory for $432,000.

Explanation: from the question, the work in process account is receiving inventory that is why we had to debit the work in process account for $432,000.

This is to say that the opening balance in work in process account is $68,000, during the month the various overheads added to the account costs $450,000 and at the end of the period it was noted that the account actually had a bal of $86,000. That is why the account was debit to Work-in-Process Inventory for $432,000.

Answer 2

Answer: a. Debit to Finished Goods inventory

Explanation:

Finished Goods inventory amount is determined by taking cost work in progress at the beginning of the year plus cost of production incurred during the year and subtract cost of products still in production at the end of the year (Closing work in Progress).

Finished Goods inventory = 68000 + 450000 - 86000 = 432000

cost of Finished Goods is $ 432000, We will process a debit Journal entry in the Account of Finished Goods to recognize the increase in inventory