Hsu Company incurred $90,000 of depreciation for the year. Eighty percent relates to the firm's production facilities, and 20% relates to sales and administrative offices. If all items are handled in the proper manner, a review of the company's accounting records should reveal a:
A) debit to Depreciation Expense for $90,000.
B) debit to Manufacturing Overhead for $90,000.
C) debit to Manufacturing Overhead for $72,000.
D) debit to Work-in-Process Inventory for $18,000.
E) credit to Cash for $90,000.

Question

Quizplus · Accepted Answer

Depreciation related to production facilities (80% of $90,000 = $72,000) should be debited to Manufacturing Overhead, reflecting the portion of depreciation expense that is associated with the production process.

Hsu Company Incurred $90,000 of Depreciation for the Year