Which of the following best describes the journal entry to record factory overhead applied to Work in Process?

• A. Debit Work in Process; Credit Factory Overhead
• B. Debit Factory Overhead; Credit Raw Materials
• C. Debit Work in Process; Credit Raw Materials
• D. Debit Factory Overhead; Credit Work in Process

Answer: (A)

Verified step by step guidance

1. Understand the concept of factory overhead: Factory overhead refers to indirect costs incurred during production, such as utilities, depreciation, and maintenance of factory equipment. These costs are applied to Work in Process to allocate them to the products being manufactured.
2. Review the purpose of Work in Process: Work in Process (WIP) represents the costs of partially completed goods. When factory overhead is applied, it increases the WIP account to reflect the indirect costs associated with production.
3. Analyze the journal entry structure: A journal entry must have a debit and a credit. Debiting Work in Process increases its balance, while crediting Factory Overhead reduces its balance, as the overhead is being applied to production.
4. Match the correct accounts: To record factory overhead applied to Work in Process, the correct accounts are Debit Work in Process (to increase production costs) and Credit Factory Overhead (to reduce the overhead account).
5. Verify the correct answer: Based on the explanation, the correct journal entry is 'Debit Work in Process; Credit Factory Overhead,' as this reflects the application of indirect costs to production.