QUESTION 43 On June 30,Greenvill, Inc finshed Job 70 with totaljob costs of $40,

Question

QUESTION 43 On June 30,Greenvill, Inc finshed Job 70 with totaljob costs of $40,000 and transferred the costs to F Job 70 with tola job costs of s40.00 and transs to Finished Coods Iinventory On July 6, Greenvi completed the sale of the goods to a customer for $55, OA Debit Finished Goods Inventory 40,000 000 on account. Which is the correct journal entry to record the cost of goods sold? Credit Cost of Goods Sold 40,000 B. Debit Cost of Goods Sold 55,000 Credit Finished Goods Inventory 55,000 C Debit Cost of Goods Sold 40,000 Credit Finished Goods Inventory 40,000 D none of the above

Explanation / Answer

The accounts involved here in the transaction are Cost of goods sold and finished goods.

COGS is an expense account and finished goods is an asset account.

Finished goods are being transferred to the customer after the sale so a credit entry will be made to the account; the worth of the goods that was sold is $40,000.

An expense is incurred for the cost of goods sold, since goods or services have been transferred to the customer. So a Dr Entry will be made in COGS account.

So the correct entry will be

COGS DR - $40000

Finished Goods Inventory Cr - $40,000

Correct answer is C.

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