Michael Paints Has Two Processes-Coloring Department and Mixing Department

question 64

Essay

Michael Paints has two processes-Coloring Department and Mixing Department. Michael sold 200 gallons of paint for $220,000 of which $150,000 was sold on account. The total cost of processing was $385,000 for 5,500 gallons of paint. What are the journal entries to record a sale if Michael follows a process costing system?

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Definitions:

Income From Operations

The earnings generated from a company’s core business activities, excluding any gains or losses from investments and other non-operational sources.

Invested Assets

Assets acquired by a company or individual as a means of generating future income.

Investment Turnover

A measure of a company's efficacy in using its assets to generate revenue, calculated by dividing sales by the average investment.

Profit Margin

is the percentage of revenue that remains as profit after all expenses are subtracted from sales.