Question 1

The journal entry to record the use of direct materials in Processing Department #1 would include a credit to WIP-Processing Department #1.

Accepted Answer

The journal entry to record the use of direct materials in Processing Department #1 would include a debit to WIP-Processing Department #1, as it increases the work in process inventory for that department.

Question 2

The journal entry to record the use of direct materials in Processing Department #1 would include a debit to Raw Materials inventory.

Accepted Answer

The journal entry to record the use of direct materials would include a debit to Work in Process Inventory for Processing Department #1, not Raw Materials Inventory.

Question 3

When units are transferred from Processing Department #1 to Processing Department #2,a credit is made to WIP-Processing Department #2 to reflect the transferred-in costs.

Accepted Answer

When units are transferred from Processing Department #1 to Processing Department #2, a debit is made to WIP-Processing Department #2 to reflect the transferred-in costs, not a credit.

Question 4

The journal entry to record the ultimate completion of the units would include a credit to Finished Goods Inventory.

Accepted Answer

The journal entry to record the ultimate completion of the units would include a debit to Finished Goods Inventory, not a credit, as it reflects the addition of completed goods to inventory.

Question 5

When the units are sold,Finished Goods Inventory is debited.

Accepted Answer

When units are sold, Finished Goods Inventory is credited to decrease the inventory balance, and Cost of Goods Sold is debited to reflect the expense.

Question 6

The journal entry to record the ultimate completion of the units would include a credit to the WIP inventory account of the last sequential production department.

Accepted Answer

This is because when the units are completed, they are transferred out of the last production department's WIP inventory account and into finished goods inventory or transferred to the next department. Therefore, the journal entry would require a credit to the WIP inventory account of the last sequential production department.

Question 7

The journal entry to record the use of direct labor in Processing Department #1 would include a debit to WIP-Processing Department #1.

Accepted Answer

Direct labor is a component of manufacturing costs and should be recorded in the Work-in-Process (WIP) account. Therefore, a debit is made to WIP-Processing Department #1 when direct labor is used in this department.

Question 8

When the units are sold,Finished Goods Inventory is credited.

Accepted Answer

When the units are sold and leave the company, they are no longer considered part of the finished goods inventory. Therefore, the finished goods inventory account must be reduced by crediting it.

Question 9

The journal entry to record the ultimate completion of the units would include a debit to Finished Goods Inventory.

Accepted Answer

When the units are completed and ready for sale, they are transferred from Work in Progress Inventory to Finished Goods Inventory. Therefore, the journal entry to record the ultimate completion of the units would include a debit to Finished Goods Inventory.

Question 10

The journal entry to record the use of direct materials in Processing Department #1 would include a debit to WIP-Processing Department #1.

Accepted Answer

Direct materials are considered a part of the conversion costs in a manufacturing environment. The use of direct materials in Processing Department #1 would increase the amount of work in process in that department, which is represented by the WIP-Processing Department #1 account. Therefore, the journal entry would include a debit to this account.

Question 11

When are transferred from Processing Department #1 to Processing Department #2,a credit is made to WIP-Processing Department #1 to reflect the transferred-out costs.

Accepted Answer

This statement is true. Transferring costs from one processing department to another means that the costs from Processing Department #1 are no longer considered "work in progress" for that department, so a credit is made to that department's WIP account to reflect the transferred-out costs.

Question 12

When the units are sold,Cost of Goods Sold is credited.

Accepted Answer

Cost of Goods Sold (COGS) is debited when units are sold, as it represents an expense incurred by the business.

Question 13

The journal entry to record the use of direct materials in Processing Department #1 would include a credit to Raw Materials inventory.

Accepted Answer

This is because the use of direct materials in the production process would reduce the amount of raw materials inventory available, thus requiring a credit to the Raw Materials inventory account to reflect this reduction.

Question 14

The journal entry to record the ultimate completion of the units would include a debit to the WIP inventory account of the last sequential production department.

Accepted Answer

The journal entry to record the completion of units would include a credit to the WIP inventory account of the last production department and a debit to the Finished Goods Inventory account.

Question 15

The journal entry to record the use of direct labor in Processing Department #1 would include a debit to Wages Payable.

Accepted Answer

The journal entry to record the use of direct labor would include a debit to Work in Process Inventory for the specific department, not Wages Payable. Wages Payable is credited when recording the liability for wages owed.

Question 16

ABC produces ping pong balls using a three-step sequential process that includes molding,coloring and finishing.When the balls and associated costs are transferred from the molding process to the coloring process,which account is debited?

Accepted Answer

When costs and products are transferred from one process to the next in a sequential production process, the Work in Process (WIP) inventory account for the receiving process is debited. In this case, the coloring process is receiving the balls and associated costs from the molding process, so WIP inventory-coloring is debited.

Question 17

When units are transferred from Processing Department #1 to Processing Department #2,a debit is made to WIP-Processing Department #1 to reflect the transferred -out costs.

Accepted Answer

When units are transferred from Processing Department #1 to Processing Department #2, a credit is made to WIP-Processing Department #1 to reflect the transferred-out costs, not a debit.

Question 18

The journal entry to record the use of direct labor in Processing Department #1 would include a credit to WIP-Processing Department #1.

Accepted Answer

The journal entry to record the use of direct labor would include a debit to WIP-Processing Department #1, not a credit, as it increases the work in process inventory.

Question 19

The journal entry to record the use of direct labor in Processing Department #1 would include a credit to Wages Payable.

Accepted Answer

Direct labor is an expense, and therefore is debited to the Processing Department #1 account. However, since it is a liability until it is paid, a credit to Wages Payable is also necessary.

Question 20

When the units are sold,Cost of Goods Sold is debited.

Accepted Answer

Cost of Goods Sold is a debit account which is used to record the cost of the products sold. When a company sells their products, they need to record the cost of those products as an expense, and this expense is recorded as a debit to the Cost of Goods Sold account. Therefore, when the units are sold, Cost of Goods Sold is debited.

Quiz 5: Process Costing