What is the journal entry to reclass items from WIP to finished goods?
When a product is being produced, the company would record the value of the inventory to work-in-process (“WIP”). Once the product is complete, the company needs to reclass the value of that inventory to finished goods since it is now ready to be sold. The journal entry would be a debit to inventory-finished goods and a credit to inventory-WIP.
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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