In adjusting entries for a manufacturing business,the beginning balance of the work in process inventory is eliminated by crediting Work in Process Inventory and debiting

Question

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The beginning balance of Work in Process Inventory represents the cost of goods that were partially completed in the previous accounting period but were not yet finished. To eliminate this balance, a debit entry needs to be made to Manufacturing Summary, which is an interim account that accumulates all manufacturing costs incurred during the period. The credit entry needs to be made to Work in Process Inventory, which reduces the balance to zero. Choice A is incorrect because it would increase the balance of Finished Goods Inventory, which represents only the cost of goods that are completely finished and ready to be sold. Choice C is incorrect because Income Summary is used to transfer the company's net income or loss to the Retained Earnings account at the end of the period. Choice D is incorrect because Merchandise Inventory is used by merchandising businesses to account for goods purchased for resale, not for manufacturing businesses to account for partially completed goods.

In Adjusting Entries for a Manufacturing Business,the Beginning Balance of the Work