Question

As goods are transferred from a prior process to a subsequent process, the following entry to record the cost of abnormal spoilage would be

a) Debit Work in Process Inventory, Credit Abnormal Spoilage Expense
b) Debit Abnormal Spoilage Expense, Credit Work in Process Inventory
c) Debit Finished Goods Inventory, Credit Abnormal Spoilage Expense
d) Debit Abnormal Spoilage Expense, Credit Finished Goods Inventory

Answer 1

To record the cost of abnormal spoilage, debit Abnormal Spoilage Expense and credit Work in Process Inventory, recognizing the spoilage cost as an expense immediately.

Step-by-step explanation:

When goods are transferred from one process to another and there is abnormal spoilage, the accounting entry required to record the cost of abnormal spoilage would be to debit Abnormal Spoilage Expense and credit Work in Process Inventory. This entry reflects that the cost associated with the abnormal spoilage is treated as an expense immediately, rather than being added to the cost of inventory. The Work in Process Inventory account is credited because the goods that were spoiled were part of the inventory and now are being removed due to spoilage.