ECONOMICS

Detailed explanation-1: -Answer and Explanation: Answer: c. a debit to Cost of Goods Sold and a credit to Finished Goods Inventory.

Detailed explanation-2: -When an item is ready to be sold, it is transferred from finished goods inventory to sell as a product. You credit the finished goods inventory, and debit cost of goods sold.

Detailed explanation-3: -Once the product is complete, the company needs to reclass the value of that inventory to finished goods since it is now ready to be sold. The journal entry would be a debit to inventory-finished goods and a credit to inventory-WIP. The net impact to the balance sheet is zero.

Detailed explanation-4: -What is a journal entry for cost of goods sold? The journal entry for cost of goods sold is a calculation of beginning inventory, plus purchases, minus ending inventory.

Detailed explanation-5: -Being a cost, COGS is a debit on your income statement or balance sheet. Anything that costs money is a debit, while anything that increases a company’s value or revenue is a credit.