Question

The Allen Company has the following information for the Assembly Department for the month of October: Materials purchased $ 45,000

Materials used 49,000
Direct labor Actual manufacturing overhead 30,000
Cost of goods completed and transferred to the Finishing Dept.56,000
Overhead rate is 200 percent of direct labor costs. 125,000

Allen Company uses a process costing system for the Assembly Department. The journal entry to record goods completed and transferred out of the Assembly Department would include a

a. debit to Finished Goods Inventory for $125,000.
b. credit to Materials Inventory for $125,000.
c. debit to Work in Process-Assembly Department for $125,000.
d. debit to Work in Process-Finishing Department for $125,000.

Answer 1

a. debit to Finished Goods Inventory for $125,000.

Step-by-step explanation:

The journal entry to record completed and transferred out is shown below:

Finished Goods Inventory A/c Dr $125,000

To Work in Process-Assembly Department A/c $125,000

(Being the completed and transferred out is recorded)

We simply debited the finished goods inventory account and credited the work in progress account so that the correct posting can be done.

All other information which is given is not relevant. Hence, ignored it