 takes it down to zero and that of course out that worked very perfectly right there and so it may not always be exact so I'm going to scroll back up and we're back to a hundred percent and let's see what else we got support accounting instruction by clicking the link below giving you a free month membership to all of the content on our website broken out by category further broken out by course each course then organized in a logical reasonable fashion making it much more easy to find what you need then can be done on a youtube page we also include added resources such as excel practice problems pdf files and more like quickbooks backup files when applicable so once again click the link below for a free month membership to our website and all the content on it next item what we're going to do is we're going to jump back up here and we're going to try to figure out what amount should be going from the working process to the finished goods at this point so at the end of this point at the end of the processing we've we've got what could be in working process two three four nine five hundred then we're going to basically determine in some way how much is still left by like kind of like a physical count that would be the easiest way to visualize it if we can count what's still in working process a bit more complex than that but we'll talk about that later we would say what is still left in there and then we're going to have to say that the other piece got transferred out to the finished goods process so they gave us that in this problem so we're going to say working process at the end is the 533 thousand so we then need to make this go down to 533 thousand and transfer that to the difference to the finished goods so what's going on it's going in the finished goods out of working process working process what's not done finished goods what is done what has been transferred during out this period so this is a debit and finished goods i'm going to debit it again to make it go up so i'm going to copy that i'm going to put that on top right click paste it one two three then the amount is just going to be equal to this two three four nine five zero zero minus the amount that's going to be in there at the end five three three zero zero that's what we need in order to we need this number to go down by this in order to get to that so that that's that's what that calculation is now you might be tempted to do this you might be tempted to say instead of putting this number here you could say this equals this number minus five three three zero zero zero now when we post that you're going to have a problem though because that'll create a circle reference because this number is going to be used to change that number and we just use this number to make that number so once we post it that'll be causing a problem that's why we have to hard code this one in this case to be two three four nine five zero zero like that and then we're going to credit something for that amount so it's going to be debit it's going to go in the finished goods going to go out of the working process that's going to be the credit all right so we're going to post that out so we're going to go over here so this we're looking for finished goods that's one two three four five fifth account down on the trial balance we're looking for the fifth account down here it's going to be in s19 so s19 equals and we're pointing to this one million eight sixteen five enter so finished goods goes up then we're looking for the working process right above it we're going to credit it this time it's going out of the working process working the process has a debit account we're going to make it go down by doing the opposite equals in t12 the pointing to h13 making the working process go down to what do we hope it goes down to hopefully it's going to go down to this number that we wanted to get right there the 533 so let's see if that's the case enter it goes down to 533 just as we had planned so that that that's good so the next thing we can do the same type of thing for the finished goods we can try to say okay what how much of the finished goods is still finished and how much of it is then sold this is going to be a similar calculation that we would do in any company that we bought and sold inventory so how much is not in finished goods how much has been sold and then for therefore transferred from finished goods and finally all that stuff expense in the form of cost of goods sold meaning all the direct labor all the indirect labor all the stuff we put in the factory overhead and then allocated over to here now is going to be expense in the form of the asset that we are selling the asset of inventory cost of goods sold so we do the same type of thing we're going to say all right it's going to go out of the finished goods if we sold it so I'm going to copy that and I'm going to skip a line and put that on the bottom and it's going to go into the cost of goods sold finally the expense that's going to be the debit on top when we sell stuff this is the normal kind of transaction we think about when we sell things but it can look confusing because notice we're going to calculate the sale here but this whole problem hasn't been talking about sales at all so I've been talking about the allocation of cost of the inventory so now we're doing the cost of the inventory that we sold before we're doing the inventory sale which can be a bit unusual usually we would do the sale first but we're going to follow through that with this cost flow assumption all the way through and we're going to say what's the amount going to be well it's going to be this two four three two five the 10 finished goods inventory minus this 176176001 for some reason and enter and that's going to be the debit and the credit what does that mean it means that this number needs to get down to the physical count that we counted to be in there so this number minus that number will bring it down to the physical count that we counted it to be hopefully once we post this out which we will do now so cost of goods sold the second last account down here on the income statements so i'm going to scroll over here scrolling scrolling scrolling and way over here cost of goods sold now you could try to make this smaller to see it but it's pretty far out i'm not sure it's going to work has to be really small all right so maybe maybe we can see that so it's probably pretty small so way over here cost of goods sold way over here on a e16 that equals this 2 million 256 4 9 9 and that populates here then in the trial balance there it is and then we're going to post the other side to the finished goods inventory here it is there finished goods inventory like a fifth account down on the trial balance therefore it's going to be the fifth account on the general ledger so here it is here we're going to credit it this time there's the number we can't quite see the name that's okay so this equals and sell t20 that 2 million 256 4 9 9 bringing it down to this 176 0 0 1 176 0 0 that number looks familiar because that's what we counted it to be that's what we wanted it to end up at now we're going to do this one last thing we're going to post the sale for the period here just so we have the sales number because we recognize the cost of goods sold there's going to be sales related to that notice the sales number has nothing to do with the cost of goods sold number because that's our sales price whatever how will we determine what the sales price was that's how much we actually got or received on credit in this case for the sales made so related to this journal entry remember whenever we make a journal entry we usually you know debit accounts see both credit sales and then do this debit costs goods solds credit inventory when we sell inventory so we're going to debit in this case the accounts receivable for the sale instead of cash because we sold it on account and it's going to be 250 000 and we're going to credit to the 250 000 and let's post that to the or let's record that to the sales which is our income account sales revenue it has a credit balance so we're going to do the same thing to it make it go up sales revenue pretty much always goes up we're going to post this out then at this time now so we're over here in 0 16 0 16 equals and we're going to point to that 2 500 000 there's that we're going to go to the sales that's going to be a way that's going to be like the third to last account in the dark blue first dark blue last count overall way over here and it's going to be a credit and again we could try to make it small so we can see it in both sides but that's pretty far all right so I can kind of see it there it's pretty small but we're way over here in cell AF 9 that equals this credit way over here in H 19 making this amount go up and we can see that on our trial balance if we make this large again we make this large there it is on our trial balance so now we're back in balance we can see that what happened from this transaction from our sales here's our sales 2 million 5 cost of goods sold 2 million 250 6 4 99 so we have 243 409 from that part of our sales minus the cost of those goods that are sold now next it's good to take a look at the cost of goods manufactured in terms of a formula here in terms like a form so if we're going to figure out the cost of goods that were manufactured and use that then to figure out the cost of goods sold those are going to be very familiar calculations we're going to start off with the direct materials you and I'm going to take this from the working process account so what we're basically doing is we're saying okay here's the working process which includes this working process for the direct materials that were used as was mentioned in the problem then we're going to add to that the direct labor direct labor we're going to do the same thing here so I'm going to say this equals and look at that working process account and figure out the amount that was transferred over for direct labor and it's right there the seventy eighty seven eighty thousand seven hundred and eighty thousand and then of course we have the last piece of the production the overhead that was applied so I'm going to say that equals and scroll over to that amounts again there's the overhead it's the nine thirty six thousand and we have that so we're going to have the total manufacturing if we add those up now so we will of course use the trusty sum function equals the sum and shift nine and add this plus this plus this that's the total manufacturing cost during them we're going to add to that the beginning work in process I'm going to abbreviate what was in there at the beginning of the month and once again I'm just going to say equals and that's basically coming from the general ledger this is what we had in there before we started taking a look at anything and that's going to give us the total working process total cost of work in process that's what we have that we could then allocate equals the sum of I have two equal signs there equals the sum of these two items here and then we're going to subtract from that less ending inventory ending whip and that and again we could think about that it's kind of like a physical count it's going to be a bit more calculated to figure out you know what's left in there which we'll talk about later but they gave us that in this problem to be the 533 so if we go back over here basically we said that it was going to end up to be the 533 and that's how we figured out this number to take it down to so we can think about this in our problem that was like the physical count that we brought it down to therefore the cost of good goods manufactured that's what we're trying to get here it's going to be this number the stuff that was available in working process less the amount that was still in working process at the end that's the amount that was the cost of goods manufactured not to be confused with the cost of goods sold this is the stuff that went out from working process to ending inventory being then available for sale now we can use that number in place of what's usually the purchases number to figure out the cost of goods sold so like if we buy and sell stuff that would we usually buy things and purchases in this case we don't buy things we make things so this number is going to replace the purchases item basically in our cost of goods calculation force a company that produces things versus one that simply buys and sells things so we'll start off with beginning finished goods inventory and that's of course going to equal what's in finished goods at the beginning so we're going to go over here finished goods inventory started off with this 616 so that's what we have in finished goods inventory then we're going to put there usually we would put in a man in a if we bought and sold inventory purchases but we this is where we're going to stick with this number that we just calculated because we don't purchase stuff we make stuff here so that that's how this number ties in to the cost of goods calculation i'm going to go ahead and under that line that that gives us the cost of goods available so i'm going to say that that equals the sum of 616 and the 1 million 816 five that's the cost of goods available less we're going to say the less the ending finished goods inventory and you might be saying again how would we know what that number is and in real life we i mean we could think of it the most simplified way to think about that is we would count it and the problem gave us this number we wanted to end up at this number here and that's how we figured out to do this to it so this was the ending count 176 001 there and that's how we derived the cost of goods sold which would then be equal to this number the cost of goods available minus the less the ending inventory the physical count and there is that number i'm going to go ahead and underline this and there's those two calculations