28PGA_d - Horngren'S Financial And Managerial Accounting

Question

Clement Manufacturing makes carrying cases for portable electronic devices. Its costing records yield the following information:

Job No.	Date	Total cost of Job at October 31	Total manufacturing costs added in November
Started	Finished	Sold
1	10/03	10/12	10/13	\(1,300
2	10/03	10/30	11/01	1,400
3	10/17	11/24	11/27	1,000	\)900
4	10/29	11/29	12/03	1,200	1,200
5	11/08	11/12	11/14		650
6	11/23	12/06	12/09		500

Requirements

4. Record the sale of Job 3 for $2,300 on account

 

Step-by-Step Solution

Answer

Date	Particulars	Debit ($)	Credit ($)
1.	Account receivable	2,300
	Sales revenue		2,300
2.	Cost of goods sold	1,900
	Finished goods inventory		1,900

Step 1: Cost of goods sold for Job no. 3

$\begin{array}{c}\mathbf{Costofgoodssold}\mathbf{=}\mathbf{TotalcostofJobNo}\mathbf{.}\mathbf{3}\mathbf{tillOctober}\mathbf{31}\mathbf{+}\mathbf{TotalcostofJobNo}\mathbf{.}\mathbf{3}\mathbf{inNovember}\\ =\$1,000+\$900\\ =\$1,900\end{array}$

Step 2: Recording of sales transaction in the books of the company

The sale on account of the company is recorded by the company by debiting the accounts receivable account and by crediting the sales revenue account. And the related cost of goods sold is recorded by debiting the cost of goods sold and by crediting the finished goods inventory account.