Rankin Food Products produces cane sugar syrup in bulk quantities and uses process costing. There are three processing departments-Mixing, Refining, and Packaging. Using process costing analysis, Rankin determined that the cost of the units completed and transferred out of the Refining Department during the month was $20,000. Which of the following is the correct journal entry to record the cost of the units completed and transferred out to the next department?

Question

Quizplus · Accepted Answer

When units are completed in one department and transferred to the next department in a process costing system, the cost of those completed units is transferred from the completing department's Work in Process account to the next department's Work in Process account. Therefore, you debit Work in Process - Packaging (the next department) and credit Work in Process - Refining (the department that completed the work).

Rankin Food Products Produces Cane Sugar Syrup in Bulk Quantities