Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

2. Transaction Analysis

Journal Entries: Debits and Credits

Financial Accounting

2. Transaction Analysis

Journal Entries: Debits and Credits

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Multiple Choice

A journal entry that includes manufacturing overhead and cost of goods sold is recorded to:

Allocate direct labor costs to Work in Process

Transfer applied overhead from Manufacturing Overhead to Cost of Goods Sold

Record the purchase of raw materials

Recognize sales revenue from finished goods

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Verified step by step guidance

Understand the purpose of the journal entry: The problem is asking about the correct journal entry related to manufacturing overhead and cost of goods sold. This typically involves transferring applied overhead costs to the appropriate account.

Review the concept of applied overhead: Manufacturing overhead includes indirect costs such as factory utilities, depreciation, and indirect labor. Applied overhead is allocated to products based on a predetermined rate, often tied to direct labor hours or machine hours.

Identify the correct accounts involved: The journal entry will involve debiting Cost of Goods Sold (COGS) to reflect the applied overhead costs and crediting Manufacturing Overhead to reduce the balance in that account.

Understand the flow of costs: Manufacturing overhead is initially recorded in the Manufacturing Overhead account. When products are sold, the applied overhead is transferred to Cost of Goods Sold to match expenses with revenues.

Write the journal entry: Debit Cost of Goods Sold to increase the expense account and credit Manufacturing Overhead to decrease the overhead account. This reflects the transfer of applied overhead costs to COGS.