Haupt Inc.manufacturers water pumps.Each pump requires $155 of raw materials and $315 of conversion costs.Each pump is sold for $725.Last month Haupt produced and sold 69 pumps.The journal entry to record cost of goods sold would include:
A)Debit to accounts receivable of $32,430.
B)Credit to sales of $32,430.
C)Debit to cost of goods sold of $32,430.
D)Credit to cost of goods sold of $50,025.
E)Debit to sales of $50,025.

Question

Quizplus · Accepted Answer

Cost of goods sold is the cost of the products that were sold during the period. It includes both the direct materials and the conversion costs. To record the cost of goods sold, we need to debit the cost of goods sold account and credit the raw materials inventory and the work-in-progress inventory accounts. Since we know that each water pump requires $155 of raw materials and $315 of conversion costs, the total cost of goods sold for the 69 pumps would be $32,430 ($155 + $315 = $470 x 69 = $32,430). Therefore, the correct journal entry to record the cost of goods sold would be a debit to cost of goods sold for $32,430.

Haupt IncManufacturers Water Pumps