The cost of production summary for Maha Industries follows: What is the journal entry to record the distribution of labor to production?
A)Finished goods 4,000 Payroll 4,000
B)Work in process 4,000 Overhead 4,000
C)Work in process 4,000 Payroll 4,000
D)Payroll 4,000 Accrued payroll 4,000

Question

The cost of production summary for Maha Industries follows:  What is the journal entry to record the distribution of labor to production?
A)Finished goods 4,000 Payroll 4,000 ​ 
B)Work in process 4,000 Overhead 4,000 ​ 
C)Work in process 4,000 Payroll 4,000 ​ 
D)Payroll 4,000 Accrued payroll 4,000

Quizplus · Accepted Answer

The journal entry to record the distribution of labor to production is to debit work in process (WIP) for the labor cost incurred and credit payroll for the same amount. Option C matches this criteria, as it debits WIP and credits payroll for the amount of $4,000. Option A is incorrect as it credits finished goods instead of debiting WIP, and Option B is incorrect as it credits overhead, which is not involved in the distribution of labor to production. Option D is incorrect as it debits payroll, which is not the account being charged for the labor cost incurred.

The Cost of Production Summary for Maha Industries Follows