Question

4. Move from one department to the next

WIP-department b xxx
WIP-department a xxx

Option 1: Transfer Journal
Option 2: Debit Work in Process, Credit Finished Goods
Option 3: Debit Finished Goods, Credit Work in Process
Option 4: Debit Work in Process, Credit WIP-Department B

Answer 1

There are multiple options to record the transfer of Work in Process (WIP) from one department to another, including using a Transfer Journal, debiting and crediting different accounts, and specifying the department. The choice depends on the organization's accounting policies.

Step-by-step explanation:

When moving from one department to the next in the work-in-progress (WIP) process, there are different options for recording the transaction.

1. Option 1: Transfer Journal - This option involves transferring the WIP from one department to another using a Transfer Journal entry.
2. Option 2: Debit Work in Process, Credit Finished Goods - This option involves debiting the Work in Process account of the first department and crediting the Finished Goods account of the next department.
3. Option 3: Debit Finished Goods, Credit Work in Process - This option involves debiting the Finished Goods account of the first department and crediting the Work in Process account of the next department.
4. Option 4: Debit Work in Process, Credit WIP-Department B - This option involves debiting the Work in Process account of the first department and crediting the specific WIP-Department B account of the next department.

Each option has its own implications and depends on the specific accounting policies and practices followed by the organization.