What is the journal entry to reclass items from raw materials to WIP?
When a company purchases raw materials, there would be a debit to increase inventory for raw materials. As the company uses the materials to create products, those products are classified as work-in-process (“WIP”) until they are complete. At the end of a reporting period, the company would need to quantify the dollar value of product that is current in WIP. To reclass items from raw materials to WIP, you would debit inventor-WIP and credit inventory-raw materials.
The net impact to the balance sheet is zero. There is also zero impact to the income statement. The entry simply reclasses items within the inventory account so that users of the financial statements understand how inventory is broken down into raw materials, WIP, and finished goods.
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What are the journal entries to record the purchase of raw materials?
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