Answer the following questions using the information below:
Games R Us manufactures various games. For March, there were no beginning inventories of direct materials and no beginning or ending work in process. Conversion costs is the only indirect manufacturing cost category currently used. Journal entries are recorded when materials are purchased and when conversion costs are allocated under backflush costing.

-Which of the following entries properly records the cost of goods sold for the month?

Question

Answer the following questions using the information below:
Games R Us manufactures various games. For March, there were no beginning inventories of direct materials and no beginning or ending work in process. Conversion costs is the only indirect manufacturing cost category currently used. Journal entries are recorded when materials are purchased and when conversion costs are allocated under backflush costing.
 
-Which of the following entries properly records the cost of goods sold for the month?

Quizplus · Accepted Answer

The cost of goods sold for the month can be calculated as follows:
Beginning Balance of Finished Goods + Cost of Goods Manufactured - Ending Balance of Finished Goods = Cost of Goods Sold
Since there were no beginning and ending inventories of work in process, the cost of goods manufactured is the total cost incurred during the month, which is the sum of the direct materials used and conversion costs allocated.
Option B records the allocation of conversion costs to the cost of goods manufactured account, which is the correct way to record it under backflush costing. Therefore, Option B is the best choice for recording the cost of goods sold for the month.

Answer the Following Questions Using the Information Below