In backflush costing, the journal entry to record the costs of completed production would include a
A) debit to Conversion Costs.
B) credit to Accounts Payable.
C) debit to Finished Goods Inventory.
D) credit to Work-in-process.

Question

Quizplus · Accepted Answer

In backflush costing, the journal entry to record the costs of completed production includes a debit to Finished Goods Inventory. This is because, in backflush costing, all the costs are accounted for at the end of the production cycle, when the products are completed and ready to be sold. The finished goods inventory account is used to record the cost of the completed products, including the direct materials, direct labor, and manufacturing overhead. The debit to this account represents the amount of cost that has been added to the finished goods, while the credit entry would be to the work-in-process inventory account to indicate that the production process has been completed. Therefore, the correct answer is C, debit to Finished Goods Inventory.

In Backflush Costing, the Journal Entry to Record the Costs