Use the following information for Swansea Manufacturing Company: work in process finished goods Begining Balance $30,000...

Use the following information for Swansea Manufacturing Company:

	work in process	finished goods
Begining Balance	$30,000	$36,000
Transfers In	50,000	?
Transfers out	44,000	?
Ending Balance	?	30,000

The cost of goods sold for the period was:
    a. $6,000
    b. $56,000
    c. $44,000
    d. $50,000

Solutions

Expert Solution

Ans) (d) $50,000

Explanation) In any Manufacturing Company, Rawmaterial are processed in to Work In Process and then in to Finished Goods. So movement of stock takes place from one department to another. So What is Transfer Out for One Department is Transfer In for another department. In the same way, Transfer Out for Rawmaterial department is Transfer in for Work In Process Department & Transfer Out of Work in Process department is Transfer In for Finished Goods Department.

Cost of Goods sold represent cost of producing goods which are sold out and these sold out goods comprise solely of those goods that are ready for sale and fit in to market which is nothing but Finished Goods.

Calculation of Cost of Goods Sold(Finished Goods)

Particulars	Amount ($)
Beginning Balance of Finished Goods....(A)	$36,000
Transfer In.......(B) (Transfer Out of WIP Department is Transfer In for Finished Goods Department)	$44,000
Ending Balance of Finished Goods....(C)	($30,000)
Cost of Goods Sold....(D)=(A)+(B)-(C) (which is nothing but Transfer Out of Finished Goods Department)	$50,000

ekkarill92 answered 1 year ago

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