Johnson Production Company Uses Just-In-Time Production and Accounting Methods

Multiple Choice

Johnson Production Company uses just-in-time production and accounting methods. On June 1, Johnson paid direct labor costs of $5,000 in cash. Which of the following journal entries correctly records this transaction?

A) Debit $5,000 to Cash, credit $5,000 to Conversion costs.
B) Debit $5,000 to Conversion costs, credit $5,000 to Cash.
C) Debit $5,000 to Manufacturing overhead, credit $5,000 to Cash.
D) Debit $5,000 to Raw and in-process inventory, credit $5,000 to Cash.