In a process cost system, the cost of completed production in Department A is transferred to Department B by which of the following journal entries?

A) debit Work in Process-Department B and credit Work in Process-Department A
B) debit Work in Process-Department B and credit Finished Goods-Department A
C) debit Work in Process-Department B and credit Cost of Goods Sold-Department A
D) debit Finished Goods-Department A and credit Work in Process-Department B

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Matthew Maher · Accepted Answer

Final Answer : A, Explanation :  In a process cost system, when production is completed in one department (Department A) and transferred to another department (Department B), the journal entry is to debit Work in Process-Department B (to increase the work in process for the receiving department) and credit Work in Process-Department A (to decrease the work in process for the department that completed the work). This reflects the flow of costs from one production department to the next.

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