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Q. 12SE

Expert-verified
Horngren'S Financial And Managerial Accounting
Found in: Page 941

Short Answer

For the following accounts, indicate what causes the account to increase and decrease. The first account is completed as an example.

Account

Is increased by:

Is decreased by:

Raw material inventory

Material purchased

Material used

Work in process inventory

Finished goods inventory

Cost of goods sold

Account

Is increased by:

Is decreased by:

Raw material inventory

Material purchased

Material used

Work in process inventory

Manufacturing cost

Cost of goods manufactured

Finished goods inventory

Cost of goods manufactured

Cost of goods sold

Cost of goods sold

Finished goods manufactured

Ending inventory

See the step by step solution

Step by Step Solution

Step 1: Formula to calculate work in process

The work in process is increased by manufacturing cost and decreased by the cost of goods manufactured.

Step 2: Formula to calculate finished goods inventory

The finished goods inventory is increased by Cost of goods manufactures and decreased by the cost of goods sold.

Step 3: Formula to calculate Cost of goods sold

The cost of goods sold is increased by finished goods manufactured during the year and decreased by the ending inventory.

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