Question

If you were to clear the MOH balance to WIP, FG and COGS what percentage of the balance would you post to each of them? Select one: a. 33.33%, 33.33%, 33.33% b. 12%, 38%, 50% c. 19%, 25%, 56%

3. Which is the correct journal entry for the below transaction? $77,000 of RM were put into production, of which $73,000 were direct materials and the remainder were indirect materials. Select one: a. DB RM, CR COGS b. DB FG, CR MOH c. CR RM, DB WIP, DB MOH d. DB RM, CR WIP, CR MOH e. CR RM, DB direct materials, DB indirect materials

Answer 1

1. If I have to clean the Manufacturing Overhead, I will choose a basis as provided in the question. Else will choose an equal basis (in absence of any specific data available) which is the option no 1 per the options provided by you i.e. 33.33% each

2. During the year we don't have to recognize the WIP inventory, But at the end of the year that needs may arise thus, While passing Journal entry the thing is to note that which ledger we have debited while purchasing material
a) If Direct material & Indirect material has been debited while purchasing then

WIP......Dr 77000

Direct Material.......Cr 73000

Indirect Material.......Cr 4000

b) If RM debited while purchasing then

WIP......Dr 77000

RM........Cr 77000

Conclusion: Case c shall fit as provieded in the question