Hello! This is a good, comprehensive Management Accounting 101 -type question. The first thing you want to do is to dissect/ understand every sentence. So, let's do that: I will copy each sentence and, immediately following it, insert my tips/ notes like this.
On April 1, the company had no beginning inventories, and it purchased 5,520 batteries at a cost of $55 per battery. Debit ("dr.") Raw Materials, Credit ("cr.") Cash or Accounts Payable ("AP")
It withdrew 5,100 batteries from the storeroom during the month. Of these, 100 were used to replace batteries in cars being used by the company’s traveling sales staff. The remaining 5,000 batteries withdrawn from the storeroom were placed in cars being produced by the company. cr. Raw Materials for all 5,100 batteries and dr. Work in Progress for 5,000 + Selling Expense by 100 [batteries]
Of the cars in production during April, 90 percent were completed and transferred from work in process to finished goods. cr. Work in Progress ("WiP") for 90% of all 5,000 batteries known to be in WiP (there could be more); dr. Finished Goods for these 4,500 known batteries
Of the cars completed during the month, 30 percent were unsold at April 30. If 30% were unsold, then 70% were sold. Those are the inventory assets that we need to move to Cost of Goods Sold ("COGS") on the income statement. For that, we cr. Finished Goods for 70% of the 4,500 known batteries -- see the sentence-paragraph right above -- and dr. COGS for these 3,150 batteries
Want more help like this? Holler at me! -Basil CPA
