Diaz Company uses process costing in its two processing departments; Assembly and Finishing.If the Assembly Department requisitioned direct materials to be used in production,totaling $80,000,which one of the following journal entries would be made to record this transaction?
a.
$\begin{array}{ll}
\text { WIP Inventory - Assembly } &80,000\
\text { WIP Inventory - Materials }&&80,000
\end{array}$

b.
$\begin{array}{ll}\text { Raw Materials Inventory } &80,000\
\text { WIP Inventory - Assembly }&&80,000\end{array}$

c.
$\begin{array}{ll}\text { WIP Inventory - Assembly }&80,000 \
\text { Raw Materials Inventory }&&80,000
\end{array}$

d.
$\begin{array}{ll} \text { Cost of Goods sold } & 80,000 \
\text { Finished Goods Inventory }&&80,000
\end{array}$

e.$\text { None of the answer choices is correct. }$

Question

Diaz Company uses process costing in its two processing departments; Assembly and Finishing.If the Assembly Department requisitioned direct materials to be used in production,totaling $80,000,which one of the following journal entries would be made to record this transaction?
a.
$\begin{array}{ll}
\text { WIP Inventory - Assembly } &80,000\
\text { WIP Inventory - Materials }&&80,000
\end{array}$

b.
$\begin{array}{ll}\text { Raw Materials Inventory } &80,000\
\text { WIP Inventory - Assembly }&&80,000\end{array}$

c.
$\begin{array}{ll}\text { WIP Inventory - Assembly }&80,000 \
\text { Raw Materials Inventory }&&80,000
\end{array}$

d.
$\begin{array}{ll} \text { Cost of Goods sold } & 80,000 \
\text { Finished Goods Inventory }&&80,000 
\end{array}$

e.$\text {  None of the answer choices is correct. }$

Quizplus · Accepted Answer

When direct materials are requisitioned to be used in production in the Assembly Department, they are transferred from the Raw Materials Inventory to the WIP Inventory in the Assembly Department. Therefore, the correct journal entry to record this transaction would be to debit the WIP Inventory - Assembly account for $80,000 (to increase the value of the inventory) and credit Raw Materials Inventory for $80,000 (to decrease the value of the inventory). The correct choice is C.