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Evans Products uses a process costing system with two processing departments: the Mixing Department and the Finishing Department.In June,unit costs incurred by the Mixing Department amounted to $4.00 per unit.Unit costs transferred to the finished goods warehouse during the month amounted to $22.Work-in-process inventories are reduced to zero each month.
-The entry to record the sale of 3,500 units in June would include:
A)A debit to Work-in-Process Inventory,of $77,000.
B)A debit to Finished Goods Inventory of $77,000.
C)A debit to Cost of Goods Sold of $77,000.
D)A credit to Cost of Goods Sold of $77,000.

Question

Quizplus · Accepted Answer

When units are sold, they are no longer considered as part of either the work-in-process or finished goods inventories. Instead, their costs are transferred to Cost of Goods Sold. Therefore, the entry to record the sale of 3,500 units in June would include a debit to Cost of Goods Sold, not to Work-in-Process Inventory or Finished Goods Inventory. The amount of the debit would be 3,500 units times the unit cost transferred to finished goods warehouse, which is $22 per unit. Therefore, the correct answer is C, a debit to Cost of Goods Sold of $77,000.

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