Edwards Company produces calendars in a one-department process. The following information is available:
The units still in process are 100 percent complete with respect to direct materials and 60 percent complete with respect to conversion costs.
-In process costing, the journal entry to record direct labour would include a
A) debit to Accrued Payroll.
B) credit to Factory Overhead.
C) debit to Work-in-processDepartment Name.
D) credit to Finished Goods.

Question

Edwards Company produces calendars in a one-department process. The following information is available:
  The units still in process are 100 percent complete with respect to direct materials and 60 percent complete with respect to conversion costs.
-In process costing, the journal entry to record direct labour would include a
A) debit to Accrued Payroll. 
B) credit to Factory Overhead. 
C) debit to Work-in-processDepartment Name. 
D) credit to Finished Goods.

Quizplus · Accepted Answer

In process costing, the journal entry to record direct labor includes a debit to Work-in-process (Department Name). This is because direct labor is part of the conversion cost, which is added to the product cost in work-in-process. Accrued Payroll is used to record the value of salaries and wages earned by employees but not yet paid, while Factory Overhead is used to record indirect manufacturing costs. Finished Goods is used to record completed products that are ready for sale.

Edwards Company Produces Calendars in a One-Department Process