Question

Black Hills Manufacturing has two processing departments, Department I and Department II. During the year, direct materials worth $38,000 purchased on account were assigned to Department I. At the end of the year, when the production cost report for Department I was prepared, Black Hills assigned $40,000 to the units transferred from Department I to Department II. The journal entry to record the transfer of units to Department II will ________.

Answer 1

Answer:

Explanation:

The journal entry is shown below:

Work in progress - Department II A/c $40,000

      To Work in progress - Department I A/c  $40,000

(Being transfer of units is recorded)

The purchase of direct material is not considered in the computation part. Hence, it will be ignored. Instead of this, we consider the transferred units in the computation part.