Question

A company has two sequential processing departments: Mixing and Forming. In the Mixing Department, Step 5 of the process costing procedure assigned $10,000 to units ending WIP and $80,000 to units completed and transferred out. What journal entry is needed as a result of these calculations ?

A. Debit WIP -- Mixing Department
$10,000
Credit WIP--Forming Department
$10,000
B. Debit WIP -- Mixing Department
$80,000
Credit WIP--Forming Department
$80,000
C. Debit WIP -- Forming Department $10,000
Credit WIP- Mixing department $10,000
D. Debit WIP -- Forming Department $90,000
Credit WIP- Mixing department $80,000

Answer 1

The journal entry needed for transferring costs from Mixing to Forming Department is a debit to WIP -- Forming Department and a credit to WIP -- Mixing Department for $80,000.

Step-by-step explanation:

The correct journal entry for transferring costs from the Mixing Department to the Forming Department in a company with sequential processing departments is to debit Work in Process (WIP) -- Forming Department and credit Work in Process -- Mixing Department. Since the costs assigned to units completed and transferred out is $80,000, we credit the WIP -- Mixing Department for this amount. The units ending in WIP are assigned $10,000, which isn't part of this transfer and wouldn't be included in this particular journal entry.

The correct journal entry, representing the transfer of costs for units completed and transferred out of the Mixing Department, is Debit WIP -- Forming Department $80,000 and Credit WIP -- Mixing Department $80,000. This reflects that $80,000 worth of goods have moved from the Mixing Department to the Forming Department.