Lucky Charm is a factory that molds and assembles silver charms that are offered in a variety of themes including hearts, letters, and animals for use on charm bracelets. During the year, additional silver of $52,237 and Conversion Costs of $71,490 were added to the Molding department. During the year, the total cost of units completed by the Molding department and then transferred to Assembly amounted to $131,500. As of January 1, the beginning Work-in-Progress (WIP) Inventory (Molding) had a balance of $9,805. What journal entry would Lucky use to recognize the transfer of costs from the Molding to the Assembly department?

Question

Quizplus · Accepted Answer

This question requires knowledge about which of the costs are needed for a journal entry that will transfer the cost of completed units from Molding to Assembly. To decrease an asset, which the WIP Inventory accounts are, you must credit them. To increase an asset, you would debit the appropriate account. The appropriate figure to use for both is the cost transferred between departments of $131,500.

Lucky Charm Is a Factory That Molds and Assembles Silver