Q,18-19RQ - Horngren'S Financial And Managerial Accounting

Question

Question: Department 1 is transferring units that cost $40,000 to Department 2. Give the journal entry.

Step-by-Step Solution

Answer

Answer

Date	Particulars	Debit ($)	Credit ($)
	Work in process inventory-Department 2	40,000
	Work in process inventory-Department 1		40,000

Step 1: WIP inventory

The work in process inventory is defined as the inventory which are not fully completed and are not ready for sale. It is considered as the current asset in the company’s balance sheet.

Step 2: Transfer entry of units from one department to another department

While manufacturing the products, when the units are transferred to another department for processing, the work in process inventory of the department transferring the units is credited and the work in process inventory of the receiving department is debited.