Question

Rorry Company uses a job cost system. Finished goods costing $10,080 were sold for $25,200 cash. What is the appropriate journal entry?

a. dr. cash for $25,200 and cr. sales for $25,200
b. dr. cost of goods sold for $10,080 and cr. finished goods inventory for $10,080
c. dr. cost of goods sold for $25,200 and cr. finished goods inventory for $25,200
d. both (b) and (c) are necessary
e. both (a) and (c) are necessary

Answer 1

The appropriate journal entry for Rorry Company would be to debit Cash for $25,200 and Cost of Goods Sold for $10,080, and credit Sales for $25,200 and Finished Goods Inventory for $10,080.

Step-by-step explanation:

The appropriate journal entry for Rorry Company in this scenario would be option (e) - both (a) and (c) are necessary. The company would need to record the revenue from the sale of finished goods and also reflect the cost of producing those goods in their accounting records.

To record the cash sales of $25,200, the company would debit the Cash account for $25,200. This is represented in option (a).

To reflect the cost of goods sold, the company would need to debit the Cost of Goods Sold account for the cost of the finished goods sold, which is $10,080. This is represented in option (b).

Therefore, the appropriate journal entry would be to debit Cash for $25,200 and Cost of Goods Sold for $10,080, and credit Sales for $25,200 and Finished Goods Inventory for $10,080. This will ensure that the revenue and expenses are properly recorded in the company's accounting system.