Question

Luker Corporation uses a process costing system. The company had $160,500 of beginning Finished Goods Inventory on October 1. It transferred in $837,000 of goods completed during the period. The ending Finished Goods Inventory balance on October 31 was $158,200. The entry to account for the cost of goods sold in October is:
A. Debit Cost of Goods Sold $837,000; credit Finished Goods Inventory $837,000.
B. Debit Cost of Goods Sold $839,300; credit Work in Process Inventory $839,300.
C. Debit Finished Goods Inventory $837,000; credit Work in Process Inventory $837,000.
D. Debit Finished Goods Inventory $158,200; credit Cost of Goods Sold $158,200.
E. Debit Cost of Goods Sold $839,300; credit Finished Goods Inventory $839,300.

Answer 1

Answer:

E. Debit Cost of Goods Sold $839,300; credit Finished Goods Inventory $839,300.

Explanation:

The journal entry is as follows

Cost of goods sold Dr $839,300

          To Finished goods inventory $839,300

(Being the cost of goods sold is recorded)

The computation is shown below:

= Beginning balance of finished goods inventory + transferred of goods completed - ending balance of finished goods inventory

= $160,500 + $837,000 - $158,200

= $839,300