Question

Luker Corporation uses a process costing system. The company had $160,500 of beginning Finished Goods Inventory on October 1. It transferred in $837,000 of units completed during the period. The ending Finished Goods Inventory balance on October 31 was $158,200. The entry to account for the cost of goods manufactured during October is:

A. Debit Cost of Goods Sold $837,000; credit Finished Goods Inventory $837,000.B. Debit Cost of Goods Sold $839,300; credit Work in Process Inventory $839,300.C. Debit Finished Goods Inventory $837,000; credit Work in Process Inventory $837,000.D. Debit Finished Goods Inventory $158,200; credit Cost of Goods Sold $158,200.E. Debit Cost of Goods Sold $839,300; credit Finished Goods Inventory $839,300.

Answer 1

B. Debit Cost of Goods Sold $839,300

Step-by-step explanation:

We solve this using the inventory identity

`$$Beginning Inventory + transferred= Ending Inventory + COGS`

160,500 + 837,000 = 158,200 + COGS

160,500 + 837,000 - 158,200 = COGS

COGS 839,300

This is a general concept in accounting

there is a beginning balance and a transaction or production that increase it.

which should be equal with the ending balance and the transaction or event that decrease it.