Flying High Manufacturing produces frisbees using a three-step sequential process that includes molding, coloring and finishing. When the frisbees and associated costs are transferred out of the coloring process and into the finishing process, the journal entry would include a
A)debit to WIP Inventory-Coloring and a credit to WIP Inventory-Finishing.
B)debit to Finished Goods Inventory and a credit to WIP Inventory-Coloring.
C)debit to WIP Inventory-Finishing and a credit to WIP Inventory-Coloring.
D)debit to WIP Inventory-Coloring and a credit to Finished Goods Inventory.

Question

Quizplus · Accepted Answer

When the frisbees and associated costs are transferred out of the coloring process and into the finishing process, it means that the coloring process is complete and the unfinished goods have been transferred to the finishing process for further work. Therefore, the entry should include a debit to WIP Inventory-Finishing (to increase the value of the goods in the finishing process) and a credit to WIP Inventory-Coloring (to decrease the value of the goods in the coloring process). Option A is incorrect because it would reduce the value of the goods in the coloring process instead of increasing the value of the goods in the finishing process. Option B is incorrect because it suggests that the goods are already finished when transferred out of coloring, which is not the case. Option D is incorrect because it would suggest that the goods are already complete and have been moved to the finished goods inventory, which is not the case.

Flying High Manufacturing Produces Frisbees Using a Three-Step Sequential Process