The Balance in White Company's Work in Process Inventory Account

question 36

Multiple Choice

The balance in White Company's Work in Process inventory account was $15,000 on August 1 and $18,000 on August 31. The company incurred $30,000 in direct labor cost during August and requisitioned $25,000 in raw materials (all direct material) . If the sum of the debits to the Manufacturing Overhead account total $28,000 for the month, and if the sum of the credits totaled $30,000, then:

• A) Finished Goods was debited for $82,000 during the month.
• B) Finished Goods was credited for $83,000 during the month.
• C) Manufacturing Overhead was underapplied by $2,000 at the end of the month.
• D) Finished Goods was debited for $85,000 during the month.

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Definitions:

Periodic inventory system

An inventory accounting system where updates to inventory levels are made periodically, usually at the end of an accounting period, rather than after each transaction.

Ending inventory

The total value of goods available for sale at the end of an accounting period, calculated by adding purchases to beginning inventory and subtracting cost of goods sold.

Perpetual inventory method

An accounting method where inventory levels are updated in real-time with each sale and purchase, providing a continuous record of inventory balances.

Inventory method

An accounting approach used to value and manage the inventory of a business, including FIFO (First-In, First-Out), LIFO (Last-In, First-Out), and average cost methods.