Powderhouse, Inc has two processes—Coloring Department and Mixing Department
The company sold 2,000 gallons of paint for $220,000, of which $150,000 was sold on account. The total cost of processing was $385,000 for 5,500 gallons of paint. What are the journal entries to record a sale if the company follows a process costing system?
What will be an ideal response
Accounts Receivable 150,000
Cash 70,000
Sales Revenue 220,000
Units sold
Cost of Goods Sold 140,000
Finished Goods Inventory 140,000
Units sold, costs assigned to COGS
Note:
Cost of processing $385,000
Number of gallons 5,500
Cost per gallon ($385,000 / 5,500 gallons) $70
Cost of Goods Sold = $70 x 2,000 gallons = $140,000
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