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

When manufacturing overhead is applied to each job in a job order costing system, which of the following is the correct journal entry?

Debit Finished Goods; Credit Manufacturing Overhead

Debit Work in Process; Credit Manufacturing Overhead

Debit Manufacturing Overhead; Credit Work in Process

Debit Manufacturing Overhead; Credit Raw Materials

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Verified step by step guidance

Understand the concept of manufacturing overhead: Manufacturing overhead includes all indirect costs associated with production, such as factory utilities, depreciation on equipment, and salaries of supervisors. In a job order costing system, these costs are applied to individual jobs based on a predetermined overhead rate.

Recognize the correct account to debit: When manufacturing overhead is applied to a job, it increases the Work in Process (WIP) account because the costs are being allocated to jobs that are still in production. Therefore, the debit entry should be made to the Work in Process account.

Identify the correct account to credit: Manufacturing Overhead is a temporary account used to accumulate indirect costs during the period. When these costs are applied to jobs, the Manufacturing Overhead account is credited to reduce its balance, reflecting that the costs have been allocated.

Understand the journal entry format: The journal entry for applying manufacturing overhead involves debiting the Work in Process account and crediting the Manufacturing Overhead account. This ensures that the costs are properly transferred from the overhead pool to the jobs in progress.

Review the options provided: Based on the explanation above, the correct journal entry is 'Debit Work in Process; Credit Manufacturing Overhead,' as this reflects the application of manufacturing overhead to jobs in a job order costing system.