Question

We describe the flow of costs in a process costing system and prepare appropriate journal entries to record costs. A process costing system accumulates costs by department and assigns these costs uniformly to all units that pass through the department during a period. We also introduce the concept of equivalent units of production. Equivalent units is computed as the product of the number of partially completed units and the percentage completion of those units with respect to the processing in the department. We also learn about operation costing, a hybrid system, and understand how it differs from both job-order and process costing.
(For each of the five transactions described below, use the dropdown boxes to indicate which account should be debited and which account should be credited.)

Transaction Debit Credti
Raw materials worth S 12,000 were issued for use in the Cutting Department
Manufacturing overhead was applied to the Shaping Department, $10, 000
Unshaped, cut snowboards worth 90.000 were transferred from the Cutting
Department to the Shaping Department.
Finished snowboards worth $80,000 were transferred from the Shaping
Department to the finished goods warehouse.
Finished bricks that cost $100,000 were sold to customers.

Answer 1

Answer:

Indication of which account to be debited and credited:

Transaction               Debit                                        Credit

1.                    Work in Process - Cutting          Raw materials

2.                   Work in Process - Shaping         Manufacturing overhead

3.                   Work in Process - Shaping         Work in Process - Cutting

4.                   Finished Goods Inventory          Work in Process - Shaping

5.                   Cost of Goods Sold                    Finished Goods Inventory

Explanation:

a) Transaction Analysis:

1. Work in Process - Cutting Department $12,000 Raw materials $12,000

2. Work in Process - Shaping Department $10,000 Manufacturing overhead $10,000

3. Work in Process - Shaping Department $90,000 Work in Process - Cutting $90,000

4. Finished Goods Inventory $80,000 Work in Process - Shaping Department $80,000

5. Cost of Goods Sold $100,000 Finished Goods Inventory $100,000