Q17-4TI - Horngren'S Financial And Managerial Accounting

Question

Question: The following information pertains to Smith Company, which you worked with previously in this chapter:

11. Smith Company completed jobs that cost \(25,000 to manufacture. Record the journal entry.

12. Smith Company sold jobs to customers on account for \)52,000 that cost $22,000 to manufacture. Record the journal entries.

Step-by-Step Solution

Answer

Answer

Date	Particulars	Debit ($)	Credit ($)
11.	Finished goods inventory	25,000
	Work-in-process inventory		25,000

Date	Particulars	Debit ($)	Credit ($)
12.	Accounts receivable	52,000
	Sales revenue		52,000
	Cost of goods sold	22,000
	Finished goods inventory		22,000

Step 1: Sales

Sales is defined as the exchange of goods and services for money in the market. It is a transaction undertaken between the seller and the buyer.

Step 2: Cost of goods sold

Cost of goods sold is computed by adding the different direct cost which is incurred to generate the company’s revenue. It is reduced from the sales revenue to compute the gross revenue of the company.