Luker Corporation uses a process costing system.The company had $160,500 of beginning Finished Goods Inventory on October 1.It transferred in $837,000 of units completed during the period.The ending Finished Goods Inventory balance on October 31 was $158,200.The entry to account for the cost of goods sold in October is:
A)Debit Cost of Goods Sold $837,000; credit Finished Goods Inventory $837,000.
B)Debit Cost of Goods Sold $839,300; credit Work in Process Inventory $839,300.
C)Debit Finished Goods Inventory $837,000; credit Work in Process Inventory $837,000.
D)Debit Finished Goods Inventory $158,200; credit Cost of Goods Sold $158,200.
E)Debit Cost of Goods Sold $839,300; credit Finished Goods Inventory $839,300.

Question

Quizplus · Accepted Answer

The cost of goods sold represents the cost of units completed and transferred out of the production process, which in this case is $837,000. Therefore, the entry should be to debit Cost of Goods Sold for $837,000 and credit Finished Goods Inventory for the same amount. Option E is the only one that reflects this entry.

Luker Corporation Uses a Process Costing System