During its first year, Green Garden (GG), which operates a Just-In-Time producti

Question

During its first year, Green Garden (GG), which operates a Just-In-Time production system, recorded the following costs (all data in thousands): materials purchased, $3,360; direct labor, $670; and overheads; $3,200. Two thousand units were completed. At the year-end, 300 units were still in process. These were 80% complete with respect to materials and 50% complete with respect to conversion costs. Which of the following is the CORRECT journal entry?
Answer


Dr. Wages payable $670
Cr. COGS $670

Dr. Raw and in process inventory $990
Cr. COGS $990

Dr. Raw and in process inventory $630
Cr. COGS $630

Dr. COGS $7,590
Cr. Accounts payable/cash $7,590

Explanation / Answer

Since they are operating JIT system of production, there won't be any work in proggress. So only journal to be recorded is Dr wages payable 670 cr cost of goods sold 670

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