Dazzle, Inc. produces beads for jewelry making use. The following information summarizes production operations for June. The journal entry to record June production activities for direct material usage is: Direct materials used $87,000
Direct labor used 160,000
Predetermined overhead rate (based on direct labor) 155%
Goods transferred to finished goods 432,000
Cost of goods sold 444,000
Credit sales 810,000

a. Debit Accounts Receivable $810,000; credit Cost of Goods Sold $810,000.
b. Debit Accounts Receivable $810,000; credit Sales $366,000; credit Finished Goods Inventory $444,000.
c. Debit Cost of Goods Sold $444,000; credit Sales $444,000.
d. Debit Finished Goods Inventory $444,000; debit Sales $810,000; credit Accounts Receivable $810,000; credit Cost of Goods Sold $444,000.
e. Debit Accounts Receivable $810,000; credit Sales $810,000; debit Cost of Goods Sold $444,000; credit Finished Goods Inventory $444,000.

e. Debit Accounts Receivable $810,000; credit Sales $810,000; debit Cost of Goods Sold $444,000; credit Finished Goods Inventory $444,000.

Explanation:

During the sale for the period, the Cost of Sales  of $444,000 has to be removed from the Finished Goods Inventory as :

Cost of Goods Sold $444,000 (debit)

Finished Goods Inventory $444,000 (credit)

At the Same time, the Sales Revenue and Accounts Receivable have to be recognized at $810,000 as

Accounts Receivable $810,000 (debit)

Sales Revenue $810,000 (credit)

The combined effect gives us option e : Debit Accounts Receivable $810,000; credit Sales $810,000; debit Cost of Goods Sold $444,000; credit Finished Goods Inventory $444,000.

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