Hanson Industries produces a cough syrup in two production departments: Formulat

Question

Hanson Industries produces a cough syrup in two production departments: Formulating and Bottling. All of the materials are added in the Formulating department. Once formulated, the product is transferred to the Bottling department to be packaged and shipped. If Hanson Industries uses process costing, what would be the journal entry to transfer the units to the Bottling department?

Multiple Choice

Hanson Industries produces a cough syrup in two production departments: Formulating and Bottling. All of the materials are added in the Formulating department. Once formulated, the product is transferred to the Bottling department to be packaged and shipped. If Hanson Industries uses process costing, what would be the journal entry to transfer the units to the Bottling department?

Explanation / Answer

Option A is the answer

Work-in-Process _Bottling (Debit)

Work-in-Process _Formulating (Credit)

Work-in-Process (Formulating) account is reduced as the products are passed from it other department. So, credited. And the bottling department recieves products for further processing hence Work-in-Process (Bottling) account balance increases. So debited.

Products are not yet finished. So, finished goods account is irrelavent here

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