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

Marco Company incurred the following costs for three jobs worked on in April: direct materials, direct labor, and manufacturing overhead. Which of the following journal entries correctly records the assignment of these costs to Work in Process (WIP)?

Debit Work in Process; Credit Raw Materials, Wages Payable, and Manufacturing Overhead

Debit Finished Goods; Credit Work in Process

Debit Manufacturing Overhead; Credit Work in Process

Debit Raw Materials, Wages Payable, and Manufacturing Overhead; Credit Work in Process

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Verified step by step guidance

Step 1: Understand the concept of Work in Process (WIP). WIP represents the costs of production that are partially completed. These costs include direct materials, direct labor, and manufacturing overhead incurred during the production process.

Step 2: Analyze the journal entry options provided. The correct journal entry should reflect the assignment of costs (direct materials, direct labor, and manufacturing overhead) to the Work in Process account, as these costs are incurred during production.

Step 3: Recall the accounting principle for assigning costs to WIP. When costs are incurred, the Work in Process account is debited to increase its balance, and the accounts representing the sources of these costs (e.g., Raw Materials, Wages Payable, and Manufacturing Overhead) are credited to decrease their balances.

Step 4: Match the correct journal entry to the principle. The correct journal entry should be: Debit Work in Process; Credit Raw Materials, Wages Payable, and Manufacturing Overhead. This entry reflects the movement of costs into the WIP account from their respective source accounts.

Step 5: Eliminate incorrect options. The other options provided do not correctly represent the assignment of costs to WIP. For example, 'Debit Finished Goods; Credit Work in Process' is used when transferring completed goods from WIP to Finished Goods, not for assigning costs to WIP.