Question

Mocha Company manufactures a single product by a continuous process, involving three production departments. The records indicate that direct materials, direct labor, and applied factory overhead for Department 1 were $100,000, $125,000, and $150,000, respectively. The records further indicate that direct materials, direct labor, and applied factory overhead for Department 2 were $50,000, $60,000, and $70,000, respectively. In addition, work in process at the beginning of the period for Department 1 totaled $75,000, and work in process at the end of the period totaled $60,000.The journal entry to record the flow of costs from Department 1 into Department 2 during the period is:_________.
a. Work in Process--Department 2 390,000 Work in Process--Department 1 390,000
b. Work in Process--Department 2 255,000 Work in Process--Department 1 255,000
c. Work in Process--Department 2 375,000 Work in Process--Department 1 375,000
d. Work in Process--Department 2 330,000 Work in Process--Department 1 330,000

Answer 1

Answer:

c. Work in Process--Department 2 375,000 Work in Process--Department 1 375,000

Explanation:

The journal entry is shown below:

Work in Process - Department 2 $375,000  ($100,000 + $125,000 + $150,000)

     To Work in Proces - Department 1 $375,000

(Being the flow of cost from Dept 1 to Dept 2 is recorded)

Here the work in process for dept 2 is debited as it increased the assets and credited the work in process for dept 2 as it decreased the assets