Garcia Manufacturing has two processes-Coloring and Mixing.The company assigned $390,000 to the 6000 gallons of paint transferred from Mixing Department to Finished Goods Inventory.The journal entry to record this assignment of cost is ________.
A) debit Work-in-Process Inventory-Mixing, $390,000; credit Finished Goods Inventory, $390,000
B) debit Finished Goods Inventory, $390,000; credit Cost of Goods Sold, $390,000
C) debit Cost of Goods Sold, $390,000; credit Finished Goods Inventory, $390,000
D) debit Finished Goods Inventory, $390,000; credit Work-in-Process Inventory-Mixing, $390,000

Question

Quizplus · Accepted Answer

The cost of the 6000 gallons of paint is being assigned from the Mixing Department to the Finished Goods Inventory, which means it has already completed the Coloring process. Therefore, the journal entry should be a debit to Finished Goods Inventory and a credit to Work-in-Process Inventory-Mixing. Option D is the only choice that reflects this transaction. Option A is incorrect because the cost has already been incurred in the Mixing Department and is now being transferred out. Option B is incorrect because it records the cost as an expense when it should be recorded as an asset until sold. Option C is incorrect because it is the opposite of the correct journal entry, with the debits and credits reversed.

Garcia Manufacturing Has Two Processes-Coloring and Mixing