Q18RQ - Horngren'S Financial And Managerial Accounting

Question

Explain the additional journal entries required by process costing systems that are not needed in job order costing systems.

Step-by-Step Solution

Answer

The journal entry which is required in process costing system but not required in the job order costing system is:

Date	Particulars	Debit ($)	Credit ($)
	WIP Inventory – Department 1	XXX
	WIP Inventory – Department 2		XXX
	(Transfer of units from one department to another department)

Step-by-Step Solution: Step 1: Process Costing System

A process costing system is used to determine the manufacturing cost of the product, which passes from more than one process. It determines the cost of manufacturing for every process.

Step 2: The separate journal entry passed in the process costing system

Journal entry passed when the inventory completed in the department transferred to another department. It is recorded by debiting the WIP inventory of the department receiving the units and crediting the WIP inventory of the department transferring the units.