Wyman Corporation uses a process costing system. The company manufactured certain goods at a cost of $800 and sold them on credit to Percy Corporation for $1,075. The complete journal entry to be made by Wyman at the time of this sale is:
A) Debit Finished Goods Inventory $800; debit Sales $1,075; credit Accounts Receivable $1,075; credit Cost of Goods Sold $800.
B) Debit Accounts Receivable $1,075; debit Selling expense $800; credit Sales $1,075; credit Cost of Goods Sold $800.
C) Debit Cost of Goods Sold $1,075; credit Sales $1,075.
D) Debit Accounts Receivable $1,075; credit Sales $275; credit Finished Goods Inventory $800.
E) Debit Accounts Receivable $1,075; credit Sales $1,075; debit Cost of Goods Sold $800; credit Finished Goods Inventory $800.

Question

Quizplus · Accepted Answer

This choice correctly recognizes the increase in Accounts Receivable and Sales revenue, as well as the decrease in Finished Goods Inventory and increase in Cost of Goods Sold. It reflects the fact that the goods were manufactured for $800 and sold for $1,075.

Wyman Corporation Uses a Process Costing System