Question

What is the entry to record actual factory rent for the month?

a. debit work in progress, credit manufacturing overhead

b. debit manufacturing overhead. credit accounts payable or cash

c. debit work in progress and credit accounts payable or cash

Answer 1

When any indirect expense is incurred in the factory then that expense must be recorded under the manufacturing overhead. The journal entry will be-

Manufacturing Overhead...........................................Debit

To Cash / Accounts Payble

So, the correct answer is (b).

The following options is not correct due to the following reasons-

Option (a)

This option is incorrect cause this entry is to be done while the factory manufacturing overhead is transferred to Work-In-Progress account.

Option (c)

This option is also incorrect. Cause no such entry can be made for the payment of any expense. indirect factory expenses always debited into factoty maufacturing overhead account.