Question

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?

Answer 1

Answer:

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.