Under a backflush accounting system,the following entry is made when products are completed:
A)Debit-Finished Goods Credit-Work In Process
B)Debit-Cost of Goods Sold Credit-Raw and In Process
Credit-Conversion Costs
C)Debit-Finished Goods Credit-Raw and In Process
Credit-Conversion Costs
D)Debit-Cost of Goods Sold Credit-Finished Goods

Question

Quizplus · Accepted Answer

Under a backflush accounting system, no journal entries are made until a product is completed. Then, one entry is made to record the cost of goods sold and to transfer the cost of the completed goods to finished goods inventory. This entry debits finished goods and credits both raw and in-process inventory (for the materials and labor costs) as well as conversion costs (for the overhead costs). Therefore, choice C is the correct answer.

Under a Backflush Accounting System,the Following Entry Is Made When