Griswold, Inc., which uses a process-costing system, transfers completed production from Department no. 1 to Department no. 2 for further work. Which of the following best describes the account that would be debited to record this transfer?
A) Cost of Goods Transferred.
B) Finished-Goods Inventory: Department no. 1.
C) Finished-Goods Inventory: Department no. 2.
D) Work-in-Process Inventory: Department no. 1.
E) Work-in-Process Inventory: Department no. 2.

Question

Quizplus · Accepted Answer

The account that would be debited to record the transfer of completed production from Department no. 1 to Department no. 2 in a process-costing system is Work-in-Process Inventory: Department no. 2. This is because the production is not yet finished and is still in process in Department no. 2. Work-in-Process Inventory accounts represent inventories that are not yet complete and are still being worked on. Therefore, option E is the correct choice.