Which entry would record the transfer of materials to production (WIP)?

Which entry would record the transfer of materials to production (WIP)?

• A. Dr Materials, Cr WIP
• B. Dr WIP, Cr Materials
• C. Dr Overheads, Cr Materials
• D. Dr Production Or WIP, Cr Materials

Answer: (D)

When materials are moved into production, the cost is no longer raw materials in stock; it becomes part of the cost being built into the product. So the journal must increase the cost-tracking account for production (either the WIP control account or a Production account) and decrease Raw Materials stock. That’s why the debit can be to Production or to WIP, with the credit to Materials. This records the transfer of value from raw materials to the ongoing production process. Debiting Materials would reverse the flow (increasing raw materials) and is not appropriate for a transfer to production. Debiting Overheads would misclassify the materials cost as overhead rather than as part of the production cost.

When materials are moved into production, the cost is no longer raw materials in stock; it becomes part of the cost being built into the product. So the journal must increase the cost-tracking account for production (either the WIP control account or a Production account) and decrease Raw Materials stock. That’s why the debit can be to Production or to WIP, with the credit to Materials. This records the transfer of value from raw materials to the ongoing production process.

Debiting Materials would reverse the flow (increasing raw materials) and is not appropriate for a transfer to production. Debiting Overheads would misclassify the materials cost as overhead rather than as part of the production cost.