Question

Luker Corporation uses a process costing system. The company had $172,500 of beginning Finished Goods Inventory on October 1. It transferred in $849,000 of units completed during the period. The ending Finished Goods Inventory balance on October 31 was $170,200. The entry to account for the cost of goods sold in October is:

Multiple Choice

• Debit Cost of Goods Sold $849,000; credit Finished Goods Inventory $849,000.

• Debit Cost of Goods Sold $851,300; credit Work in Process Inventory $851,300.

• Debit Finished Goods Inventory $849,000; credit Work in Process Inventory $849,000.

• Debit Finished Goods Inventory $170,200; credit Cost of Goods Sold $170,200.

• Debit Cost of Goods Sold $851,300; credit Finished Goods Inventory $851,300.

Answer 1

Answer)

Journal Entry

Date	Account Titles and Explanation	Debit	Credit
October'31	Cost of Goods sold	$851,300
	Finished goods inventory		$851,300
	(To record manufacturing cost of units sold)

Therefore the correct option in the given question is:

Debit cost of goods sold $ 851,300; Credit Finished Goods Inventory $ 851,300

Working Note:

Calculation of cost of Goods sold:

Cost of goods sold = Cost of Beginning inventory of finished goods + Cost transferred in of the units completed during the period – cost of ending finished goods inventory

                                          = $ 172,500 + $ 849,000 - $ 170,200

                                          = $ 851,300