Latta Coffee Ltd has two main processes: roasting and packaging. Roasted coffee beans are transferred to the packaging department before the final product is shipped to customers. The following information for the month of April for the Roasting department is available: total cost of goods completed and transferred from Roasting department to Packaging department is $25 000; ending work in progress in April is $1000; number of equivalent units of conversion is 5000 units.
Which of the following journal entries is appropriate at the end of April?
A) Debit Packaging Department $26 000, Credit Roasting Department $26 000
B) Debit Packaging Department $25 000, Credit Roasting Department $25 000
C) Debit Roasting Department $26 000, Credit Packaging Department $26 000
D) Debit Roasting Department $25 000, Credit Packaging Department $25 000

Question

Quizplus · Accepted Answer

The correct journal entry to record the transfer of goods from the Roasting department to the Packaging department is to debit the Packaging Department for the cost of goods completed and transferred, which is $25,000, and credit the Roasting Department for the same amount. This reflects the transfer of costs from one department to another within the company.

Latta Coffee Ltd Has Two Main Processes: Roasting and Packaging