Question

The cost of production of completed and transferred goods during the period amounted to $540,000, and the finished products shipped to customers had total production costs of $375,000. The journal entry to record the transfer of costs from work in process to finished goods is

Answer 1

Answer:

Finished Goods     $540,000 Debit

Work In Process $540,000 Credit

Explanation:

The journal entry to record the transfer of costs from work in process to finished goods is

Finished Goods     $540,000 Debit

Work In Process $540,000 Credit

This means that finished goods have been debited with the amount $ 540,000 and work in process has credited an amount $ 540,000. In other words work in process has been transferred to the finished goods account.

The amount which was sold and shipped to customers was $ 375,000. It is related to sales .It means sales of goods costing $375,000 had been shipped.