Q.18-5TI - Horngren'S Financial And Managerial Accounting

Question

Question: Castillo Company has three departments: Mixing, Bottling, and Packaging. At the end of the month, the production cost reports for the departments show the costs of the products completed and transferred were \(75,000 from Mixing to Bottling, \)50,000 from Bottling to Packaging, and $65,000 from Packaging to Finished Goods Inventory. Prepare the journal entries for the transfer of the costs.

Step-by-Step Solution

Answer

Answer

Date	Particulars	Debit ($)	Credit ($)
1.	Work in process inventory-Bottling	75,000
	Work in process inventory-mixing		75,000
2.	Work in process inventory-packaging	50,000
	Work in process inventory-Bottling		50,000
3.	Finished goods inventory	65,000
	Work in process inventory-packaging		65,000

Step 1: Transferring of under processing units from one depart to oter department

The units under processing is transferred from one department to other department by debiting the recieiving department WIP account and by crediting the transferring department WIP account.

Step 2: Transferring of WIP account to finished goods inventory

When the WIP inventory are completely processed and ready for sale, it is transferred to the finished goods inventory account by debiting the finished goods inventory account and by crediting the work in process inventory account.