Following is a partial process cost summary for Mitchell Manufacturing's Canning Department. If the units completed were transferred to the Labeling Department, what is the appropriate journal entry to transfer the conversion costs?
A) Work in Process-Labeling $183,100; Work in Process-Canning $183,100.
B) Work in Process-Labeling $196,000; Work in Process-Canning $196,000.
C) Finished Goods-Labeling $183,100; Finished Goods-Canning $183,100.
D) Work in Process-Labeling $196,000; Finished Goods-Canning $196,000.
E) Finished Goods $242,800; Work in Process $242,800.

Question

Following is a partial process cost summary for Mitchell Manufacturing's Canning Department.  If the units completed were transferred to the Labeling Department, what is the appropriate journal entry to transfer the conversion costs?
A) Work in Process-Labeling $183,100; Work in Process-Canning $183,100. 
B) Work in Process-Labeling $196,000; Work in Process-Canning $196,000. 
C) Finished Goods-Labeling $183,100; Finished Goods-Canning $183,100. 
D) Work in Process-Labeling $196,000; Finished Goods-Canning $196,000. 
E) Finished Goods $242,800; Work in Process $242,800.

Quizplus · Accepted Answer

When units are transferred from one department to another, the appropriate journal entry is to credit the work in process account of the department the units are leaving and to debit the work in process account of the department the units are entering for the same amount. Since the question is asking for the transfer of conversion costs, it means that we need to debit the conversion costs in the Labeling Department and credit the conversion costs in the Canning Department. From the given information, the total conversion costs in the Canning Department are $196,000, therefore the appropriate journal entry is Work in Process-Labeling $196,000; Work in Process-Canning $196,000.

Following Is a Partial Process Cost Summary for Mitchell Manufacturing's