A company sells goods for $150,000 that cost $54,000 to manufacture.Which statement is true?
A) The company will recognize sales on the balance sheet of $150,000.
B) The company will recognize $96,000 gross profit on the balance sheet.
C) The company will decrease finished goods by $54,000.
D) The company will increase finished goods by $54,000.

Question

Quizplus · Accepted Answer

The correct statement is C) The company will decrease finished goods by $54,000. This is because when goods that cost $54,000 to manufacture are sold, the cost of these goods is removed from the inventory account (finished goods) and recognized as cost of goods sold on the income statement, thus decreasing the finished goods inventory by $54,000.

A Company Sells Goods for $150,000 That Cost $54,000 to Manufacture.Which