When units are transferred from Processing Department #1 to Processing Department #2, a debit is made to WIP-Processing Department #2 to reflect the transferred-in costs.

Question

Quizplus · Accepted Answer

When units are transferred from one processing department to another, the receiving department (Processing Department #2 in this case) debits its WIP account to reflect the transferred-in costs. This is because the transferred-in costs represent work that has been completed in previous department(s) and is now being added to the work in progress in the current department. The sending department (Processing Department #1) would credit its WIP account to reflect that the units have been completed and transferred out.

When Units Are Transferred from Processing Department #1 to Processing