Question

Wyman Corporation uses a process costing system. The company manufactured certain goods at a cost of $870 and sold them on credit to Percy Corporation for $1,215. The complete journal entry to be made by Wyman at the time of this sale is:

Answer 1

Answer:

                                    Dr.        Cr.

Percy Corporation   $1,215

Sales                                      $1,215

Cost of Goods Sold $870

Finished Goods                     $870

Explanation:

Process costing traces the cost of item on every stage of production. These cost included the direct and indirect costs. At the end all the accumulated costs define the value of Finished Goods.

Journal Entry for sales on credit makes a account receivable and it transfers the cost from finished goods to cost of goods sold as the inventory of finished goods has been sold.