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27 September, 12:05

Clemens Cars' job cost sheet for job A40 shows that the cost to add security features to a car was $10,500. The car was delivered to the customer, who paid $14,900 in cash for the added features. What journal entries should Clemens record for the completion and delivery of job A40?

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  1. 27 September, 12:21
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    a) Record transfer of cost of completed job to Finished Goods.

    b) Record transfer of cost of completed job to Finished Goods.

    a and b

    Debit Credit

    Finished goods inventory $10,500

    Work-in-process inventory $10,500

    c) Record the cost of goods sold.

    Debit Credit

    Cost of goods sold $10,500

    Finished goods inventory $10,500

    d) Record sale price of delivered job paid in cash.

    Debit Credit

    Cash $14,900

    Sales $14,900

    Explanation:

    a and b

    Cost in the Work in process is tranferred to the finished goods goods account by debiting the Finished goods account due to its debit nature and crediting the work in process account.

    c

    On the sales of car the cost is transferred to the cost of goods sold account to reduce the inventory of finished goods value.

    d

    $14,900 Cash is received against the sale of the car.
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