Question

Prepare journal entries to record the following production activities.

1. Transferred completed goods from the Assembly department to finished goods inventory. The goods cost \(135,600.

2. Sold \)315,000 of goods on credit. Their cost is $175,000.

Short answer

Both sides of the journal totals$625,600.

Step-by-step solution

Definition of Cost of Goods Sold

The Cost of goods sold is defined as the expenses incurred by the business entity to manufacture the goods sold to the customer. It is deducted from the sales to determine the gross profit generated by the business entity.

Journal entries for production activities

Date	Accounts and Explanation	Debit ($)	Credit ($)
1	Finished goods inventory	135,600
	Work-in-process inventory – Assembly department		135,600
2	Accounts receivables	315,000
	Sales		315,000
3	Cost of goods sold	175,000
	Finished goods inventory		175,000
		$625,600	$625,600