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Jobs 2 and 5 cost $2,530 and $3,470 to make and are sold on account for $4,100 and $5,200. What amount is debited to Cost of Goods Sold?
A$9,300
B$6,000
C$3,300
D$7,650
Answer & Solution
Correct answer: B. $6,000
1. A sale takes two entries, one for the selling price and one for the cost of the inventory given up.
2. The first entry debits Accounts Receivable and credits Sales for $4,100 plus $5,200, which is $9,300.
3. The second entry moves the manufacturing cost of the two jobs out of Finished Goods.
4. That cost is $2,530 plus $3,470, which is $6,000, so Cost of Goods Sold is debited $6,000.
5. $9,300 is the revenue side of the sale, not the cost of the goods handed over.
_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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