Work-in-Process WIP Inventory
Definition: Partially completed goods
Scope:ModerateDifficulty:Moderate
Partially completed goods
Common Journal Entries
| Account | Debit | Credit |
|---|---|---|
| 1. Issue raw materials | ||
| Send $8,000 of materials to production. | ||
| Work-in-Process InventoryAsset+ | $8,000 | |
| Raw Materials InventoryAsset− | $8,000 | |
| Materials transferred to production. | ||
| 2. Apply direct labor | ||
| Factory workers earn $5,000 on the job. | ||
| Work-in-Process InventoryAsset+ | $5,000 | |
| Wages PayableLiability+ | $5,000 | |
| Labor cost added to WIP. | ||
| 3. Apply manufacturing overhead | ||
| Apply $3,000 overhead to production. | ||
| Work-in-Process InventoryAsset+ | $3,000 | |
| Manufacturing OverheadLiability+ | $3,000 | |
| Overhead absorbed into product cost. | ||
T-AccountsA visual representation of a ledger account shaped like the letter T. Left side shows debits, right side shows credits.
Work-in-Process InventoryWork-in-Process InventoryAssetA resource owned by the business. Normal balance: debit. Debits increase, credits decrease.
DebitLeft side of a journal entry. Increases assets and expenses. Decreases liabilities, equity, and revenue.
$8,000.00
$5,000.00
$3,000.00
◀ Normal bal.
CreditRight side of a journal entry. Increases liabilities, equity, and revenue. Decreases assets and expenses.
$16,000.00
Raw Materials InventoryRaw Materials InventoryAssetA resource owned by the business. Normal balance: debit. Debits increase, credits decrease.
DebitLeft side of a journal entry. Increases assets and expenses. Decreases liabilities, equity, and revenue.
◀ Normal bal.
CreditRight side of a journal entry. Increases liabilities, equity, and revenue. Decreases assets and expenses.
$8,000.00
$8,000.00
Wages PayableWages PayableLiabilityAn obligation the business owes to others. Normal balance: credit. Credits increase, debits decrease.
DebitLeft side of a journal entry. Increases assets and expenses. Decreases liabilities, equity, and revenue.
CreditRight side of a journal entry. Increases liabilities, equity, and revenue. Decreases assets and expenses.
$5,000.00
Normal bal. ▶
$5,000.00
Manufacturing OverheadManufacturing OverheadLiabilityAn obligation the business owes to others. Normal balance: credit. Credits increase, debits decrease.
DebitLeft side of a journal entry. Increases assets and expenses. Decreases liabilities, equity, and revenue.
CreditRight side of a journal entry. Increases liabilities, equity, and revenue. Decreases assets and expenses.
$3,000.00
Normal bal. ▶
$3,000.00
DurationShort-Term
External Links
- Work in process — Wikipedia