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

The journal entry to record indirect labor used in production is to:

Debit Finished Goods Inventory and credit Wages Payable

Debit Wages Expense and credit Cash

Debit Manufacturing Overhead and credit Wages Payable

Debit Work in Process Inventory and credit Wages Payable

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Verified step by step guidance

Understand the concept of indirect labor: Indirect labor refers to the wages paid to employees who support the production process but do not directly work on manufacturing the product, such as supervisors or maintenance staff.

Recognize the role of Manufacturing Overhead: Indirect labor costs are part of manufacturing overhead, which includes all indirect costs associated with production. These costs are accumulated in the Manufacturing Overhead account before being allocated to Work in Process Inventory.

Identify the correct accounts for the journal entry: To record indirect labor used in production, the Manufacturing Overhead account is debited to increase the accumulated overhead costs, and the Wages Payable account is credited to recognize the liability for wages owed.

Write the journal entry: The journal entry would be structured as follows: Debit Manufacturing Overhead (to record the indirect labor cost) and Credit Wages Payable (to record the liability for wages).

Understand why other options are incorrect: The other options provided involve accounts like Finished Goods Inventory, Wages Expense, Cash, and Work in Process Inventory, which are not appropriate for recording indirect labor. Indirect labor is not directly tied to finished goods or work in process, and it is not recorded as an expense but as part of manufacturing overhead.