Question

During 2013, Company C, an automobile manufacturer, finished producing 50 trucks, each of which had a manufacturing cost of $20,000 accumulated in Work in Process inventory previously. What would be the entry to record transfer of inventory to Finished Goods?

Accounts

Raw Materials

Work in Process

Finished Goods

Cost of Goods Sold

Amounts

$1,000,000

$1,000,000

$1,500,000

$1,500,000

Answer 1

Transfer the manufacturing costs from Work in Process to Finished Goods for the 50 trucks produced by Company C, a journal entry is made debiting Finished Goods Inventory for $1,000,000 and crediting Work in Process Inventory for the same amount.

Step-by-step explanation:

The student's question is about recording the transfer of inventory to Finished Goods in accounting. When Company C completed the production of its trucks, the cost accumulated in the Work in Process (WIP) must be transferred to Finished Goods. Since the manufacturing cost for each truck is $20,000 and there are 50 trucks, the total cost is $1,000,000 (50 trucks × $20,000 per truck).

The journal entry to record this transfer is a debit to the Finished Goods Inventory for $1,000,000 and a credit to Work in Process Inventory for $1,000,000. This entry reflects the movement of costs from one stage of inventory to another as the goods are completed.

The entry would look as follows:

• Debit Finished Goods Inventory $1,000,000
  
• Credit Work in Process Inventory $1,000,000