Question

Wyman Corporation uses a process costing system. The company manufactured certain goods at a cost of $850 and sold them on credit to Percy Corporation for $1,175. The complete journal entry to be made by Wyman at the time of this sale is:

Answer 1

Answer:

Debit - Cost of Goods Sold

Credit - Finished Goods Inventory

Debit - Accounts Receivable

Credit - Sales(revenue)

Explanation:

The accounts involved here are:

1. Accounts Receivable

2. Sales or revenue

3. Cost of sales

4. Finished goods inventory.

Firstly, manufactured goods at a cost of $850;

Debit - Cost of Goods Sold

Credit - Finished Goods Inventory

Here, finished goods inventory which is a current asset has been sold and reduced and income or sales or revenue increased. And remember, credit decreases asset

For the sales on credit to Percy corporation for $1,175;

Debit - Accounts Receivable

Credit - Sales(revenue)

Here, debit increases the accounts receivable and credit increases sales.