Question

avc company sold 300 units on account for $700 each. the standard cost of each unit is $400. under a just - in - time costing system, the journal entries that are recorded for the 300 units that are sold would be

a. sales revenue 210,000
accounts receivable 210,000
cost of goods sold 120,000
finished goods inventory 120,000

b. sales revenue 210,000
accounts receivable 210,000
finished goods inventory 120,000
cost of goods sold 120,000

c. accounts receivable 210,000
sales revenue 210,000
cost of goods sold 120,000
finished goods inventory 120,000

d. accounts receivable 210,000
sales revenue 210,000
finished goods 120,000
cost of goods sold 120,000

Explanation:

Step1: Calculate sales revenue

When 300 units are sold at $700 each, sales revenue = 300×$700 = $210,000. Since it is sold on - account, Accounts Receivable is debited and Sales Revenue is credited.

Step2: Calculate cost of goods sold

The standard cost of each unit is $400. For 300 units, cost of goods sold = 300×$400=$120,000. Finished Goods Inventory is credited and Cost of Goods Sold is debited.
The correct journal entries are:
Debit Accounts Receivable $210,000
Credit Sales Revenue $210,000
Debit Cost of Goods Sold $120,000
Credit Finished Goods Inventory $120,000

Answer:

C. Accounts Receivable 210,000
Sales Revenue 210,000
Cost of Goods Sold 120,000
Finished Goods Inventory 120,000