Annie, the accountant for a local cookie factory, has been finalizing costing information for the month so that the books can be updated and closed. After finishing the journal entries for the mixing department, she is now focusing on the baking department. The baking department began with Work-in-Progress (WIP) Inventory of $967, Transferred-In (TI) units of $6,708, and added $1,340 of cookie materials, $3,566 of Direct Labor, and $3,028 of Manufacturing Overhead in the beginning Work-in-Progress (WIP) Inventory. This department also had $347 of ending inventory in WIP. What journal entry must be made to transfer the cookies completed to the finished goods inventory?

Question

Quizplus · Accepted Answer

The first step to complete this involves determining the total cost of units completed and transferred out of the Baking Department. In order to do so, determine what amounts would have been debited to the WIP Inventory-Baking. This would include $967 costs of units in beginning inventory, $6,708 costs of units Transferred-In, $1,340 costs of cookie materials, $3,566 of Direct Labor, and $3,028 of Manufacturing Overhead added in beginning WIP Inventory this period. This will result in total of $967 + $6,708 + $1,340 + $3,566 + $3,028 = $15,609. Now, determine the costs of units completed & removed from WIP (Baking). Costs of units completed & removed: $15,609 - $347 = $15,262. The journal entry to transfer the cookies completed to the finished goods inventory will be: debit the Finished Goods Inventory and credit the WIP Inventory-Baking account, both in the amount of $15,262.

Annie, the Accountant for a Local Cookie Factory, Has Been