Question

The journal entry to record the transfer of units from Process 1 to the Process 2 in process costing is: Multiple choice question. debit Cost of Goods Sold and credit Finished Goods debit Finished Goods and credit Cost of Goods Sold debit Work in Process Inventory - 1 and credit Work in Process Inventory - 2 debit Work in Process Inventory - 2 and credit Work in Process Inventory - 1

Answer 1

Answer: debit Work in Process Inventory - 2 and credit Work in Process Inventory - 1

Step-by-step explanation:

The units needs to be moved from Process 1 so they will be credited from the the Work in process inventory of Process 1 to represent that the inventory is reducing. This is because inventory is an asset and assets are credited when they reduce.

The inventory will then be debited to Process 2 to show that Process 2 gained inventory and is increasing because assets are debited when they increase.