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23 February, 04:51

Wyman Corporation uses a process costing system. The company manufactured certain goods at a cost of $850 and sold them on credit to Percy Corporation for $1,175. The complete journal entry to be made by Wyman at the time of this sale is:

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  1. 23 February, 04:53
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    Debit - Cost of Goods Sold

    Credit - Finished Goods Inventory

    Debit - Accounts Receivable

    Credit - Sales (revenue)

    Explanation:

    The accounts involved here are:

    1. Accounts Receivable

    2. Sales or revenue

    3. Cost of sales

    4. Finished goods inventory.

    Firstly, manufactured goods at a cost of $850;

    Debit - Cost of Goods Sold

    Credit - Finished Goods Inventory

    Here, finished goods inventory which is a current asset has been sold and reduced and income or sales or revenue increased. And remember, credit decreases asset

    For the sales on credit to Percy corporation for $1,175;

    Debit - Accounts Receivable

    Credit - Sales (revenue)

    Here, debit increases the accounts receivable and credit increases sales.
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