QQuestionAccounting
QuestionAccounting
The journal entry to record manufacturing overhead applied to production includes:
a debit to Finished Goods.
a credit to Work in Process.
a credit to Finished Goods.
a debit to Work in Process.
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Answer
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Step 1:: Analyze the given information and recall the accounting principle for manufacturing overhead application.
When manufacturing overhead is applied to production, it is distributed between Work in Process and Finished Goods accounts as both accounts are affected by the application of overhead.
Step 2:: Determine the correct account types for the journal entry.
Since manufacturing overhead is being applied, the accounts involved will be Work in Process (a temporary account) and Finished Goods (an inventory account).
Step 3:: Identify the proper treatment for each account type.
Work in Process will have a credit balance as overhead is applied to the account. Finished Goods will have a debit balance as overhead is moved from Work in Process to Finished Goods.
Step 4:: Record the journal entry for manufacturing overhead application.
Credit Finished Goods $$(debit\,balance)
Based on the above analysis, the correct journal entry is:
Final Answer
The correct journal entry to record manufacturing overhead applied to production is: a debit to Work in Process, a credit to Finished Goods.
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