Black Hills Manufacturing Has Two Processing Departments,Department I and Department

question 52

Multiple Choice

Black Hills Manufacturing has two processing departments,Department I and Department II.During the year,direct materials worth $38,000 purchased on account were assigned to Department I.At the end of the year,when the production cost report for Department I was prepared,Black Hills assigned $40,000 to the units transferred from Department I to Department II.The journal entry to record the transfer of units to Department II will ________.

• A) debit Work-in-Process Inventory-Department II for $38,000 and credit Work-in-Process Inventory-Department I for $38,000
• B) debit Work-in-Process Inventory-Department I for $40,000 and credit Work-in-Process Inventory-Department II for $40,000
• C) debit Work-in-Process Inventory-Department I for $38,000 and credit Work-in-Process Inventory-Department II for $38,000
• D) debit Work-in-Process Inventory-Department II for $40,000 and credit Work-in-Process Inventory-Department I for $40,000

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Definitions:

WACC

Weighted Average Cost of Capital, a measure used to estimate the average rate a company pays to finance its assets, factoring in both debt and equity.

DCF Approach

The Discounted Cash Flow (DCF) approach is a valuation method used to estimate the value of an investment based on its expected future cash flows, adjusted for the time value of money.

Cost of Equity

The return a company theoretically pays to its equity investors to compensate them for the risk of investing in the company's stock.

Retained Earnings

The portion of net income not distributed as dividends but retained by the company to reinvest in its core business or to pay debt.