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Sue's Soup Products uses a process costing system with two processing departments: the Mixing and Cooking Department and the Canning Department.Work in process inventories are reduced to zero each month.In March,the Mixing and Cooking Department incurred manufacturing costs of $63,000 to mix 42,000 gallons of soup.The Canning Department incurred manufacturing costs of $9,000.A total of 170,000 cans of soup were transferred to the finished goods warehouse during the month.
-The journal entry to record the transfer of soup out of the Canning Department during March would include:
A)A credit to Work in Process Inventory,Canning Department of $9,000.
B)A credit to Work in Process Inventory,Canning Department of $63,000.
C)A debit to Finished Goods Inventory of $72,000.
D)A credit to Finished Goods Inventory,Mixing and Cooking Department of $72,000.

Question

Quizplus · Accepted Answer

The transfer of soup out of the Canning Department is a final product, and therefore it should be recorded as a debit to Finished Goods Inventory for the total cost incurred, which is $9,000. There is no need to credit the work in process inventory since the inventory is already reduced to zero each month. Option A and B are incorrect because they credit the work in process inventory instead of debiting the finished goods inventory. Option D is incorrect because it credits the finished goods inventory of the Mixing and Cooking Department, but the finished goods inventory should only include the products transferred out of the Canning Department.

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