Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

2. Transaction Analysis

Journal Entries: Debits and Credits

Financial Accounting

2. Transaction Analysis

Journal Entries: Debits and Credits

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Multiple Choice

Which of the following is the correct journal entry to record applying overhead during the production process?

Debit Finished Goods; Credit Manufacturing Overhead

Debit Work in Process; Credit Manufacturing Overhead

Debit Manufacturing Overhead; Credit Raw Materials

Debit Manufacturing Overhead; Credit Work in Process

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Verified step by step guidance

Understand the concept of applying overhead: Overhead costs are indirect costs incurred during production, such as utilities, depreciation, and factory maintenance. These costs are applied to the Work in Process (WIP) account during production.

Identify the correct accounts involved: When overhead is applied, the Work in Process account is debited because it represents the cost of production in progress. The Manufacturing Overhead account is credited to reduce the balance of overhead costs that have been applied.

Analyze the options provided: The correct journal entry should reflect the application of overhead costs to the Work in Process account. This means the entry should debit Work in Process and credit Manufacturing Overhead.

Eliminate incorrect options: For example, 'Debit Finished Goods; Credit Manufacturing Overhead' is incorrect because overhead is applied to Work in Process, not Finished Goods. Similarly, 'Debit Manufacturing Overhead; Credit Raw Materials' and 'Debit Manufacturing Overhead; Credit Work in Process' are incorrect because they do not reflect the proper application of overhead costs.

Confirm the correct journal entry: The correct journal entry to record applying overhead during the production process is 'Debit Work in Process; Credit Manufacturing Overhead,' as this accurately reflects the movement of costs during production.