Question

Harrington Industries, which uses a process-costing system, had a balance in its Work-in-Process account of $68,000 on January 1. 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, Harrington should make a journal entry on December 31 that includes:______.
a) a debit to Cost of Goods Sold for $432,000.
b) a debit to Finished-Goods Inventory for $86,000.
c) a credit to Work-in-Process Inventory for $432,000.
d) a credit to Work-in-Process Inventory for $86,000.
e) a credit to Finished-Goods Inventory for $432,000.

Answer 1

Answer:

c) a credit to Work-in-Process Inventory for $432,000.

Explanation:

Based on the information given Harrington should make a journal entry on December 31 that includes: A credit to Work-in-Process Inventory for the amount of $432,000 Calculated as :

Opening WIP $68,000

Add Costs incurred throughout $450,000

Less ending WIP ($86,000)

$432,000

Dr Inventory $432,000

Cr Work-in-Process $432,000