Gulliver, Inc., which uses a process-costing system, transfers completed production from Department no. 1 to Department no. 2 for further work. Which of the following best describes the account that would be debited to record this transfer? a. Work-in-Process Inventory: Department no. 1. b. Cost of Goods Transferred. c. Finished-Goods Inventory: Department no. 1. d. Work-in-Process Inventory: Department no. 2. e. Finished-Goods Inventory: Department no. 2.


Answer 1

The entries to record the transfers of completed production from Department 1 to Department 2 for further work is Debit to Work-in-Process Inventory: Department 2

Here, the product process does involve transferring of the uncompleted product to another department.

The entry of the product process is as follows:

Date   Account Titles                                               Debit    Credit  

          Work in progress inventory department 2    XXX

                   Work in progress inventory department 1         XXX

Therefore, the Option D is correct.

See similar solution here

Answer 2


d. Work-in-Process Inventory: Department no. 2.


The profuct is Transferred from Department 1 to Department 2. The cost in in the work in process of Department 1 which will be trasnferred to next department.

Following Journal entries will be recorded for this event.

                                                                                   Dr.       Cr.

Work-in-Process Inventory: Department no. 2.      xxx

Work-in-Process Inventory: Department no. 1                    xxx

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