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Jobs 1, 2, 3 and 5 are completed at costs of $1,810, $2,530, $1,420 and $3,470. Which entry records their completion?
ADebit Finished Goods $9,230, credit Work in Process
BDebit Work in Process $9,230, credit Finished Goods
CDebit Cost of Goods Sold $9,230, credit Finished Goods
DDebit Finished Goods $6,000, credit Work in Process
Answer & Solution
Correct answer: A. Debit Finished Goods $9,230, credit Work in Process
1. A completed job is no longer work in process and must be reclassified as finished goods.
2. The transfer amount is the sum of the four completed job costs: $1,810 plus $2,530 plus $1,420 plus $3,470, which is $9,230.
3. Finished Goods is an asset account increasing, so it is debited $9,230.
4. Work in Process is an asset account decreasing, so it is credited $9,230.
5. Cost of Goods Sold is touched only when a job is sold, not when it is completed.
_Source: Jonick, Principles of Managerial Accounting (UNG Press, CC BY-SA 4.0), section 2.2 Comprehensive Example of Job Order Costing Transactions for a Manufacturing Company_
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