Question

Question: A job was started on May 15, completed on June 27, and delivered to the customer on July 6. In which accounts would the costs be recorded on the financial statements dated May 31, June 30, and July 31?

Short answer

Answer:

The cost would be recorded on the financial statement on May 31 as the work in process inventory on the balance sheet. On June 30, cost is recorded as the finished goods inventory in the balance sheet and On 31 July, the cost is recorded as the cost of goods sold on the income statement.

Step-by-step solution

Work-in-process

Work in process shows the partially completed goods of the company. It is also termed as the foods in process waiting for completion and eventual sale of the goods.

Finished goods

Finished goods means the goods which have been completed by the manufacturing process but not yet sold to the customers.

The inventory is classified as work in process, finished goods while recording in the balance sheet. When the manufacturing of goods is started but not completed, it is classified as work in process. When the manufacturing is completed, it is transferred to the finished goods in the balance sheet. And, when the finished goods are sold to the customers then it is treated as the cost of goods sold in the income statement.