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Process 159

Figure 5-36: Outcomes of shipping (goods issue)

credited, and the cost of goods sold account is debited. These amounts are
based on the cost of making or buying the materials. In the case of trading
goods, the amount is based on the moving average price of the material, which
we discussed in Chapter 4. In the case of fi nished goods, the amount is based
on the standard price which takes into account production costs such as mate-
rial, labor, and overhead. An FI document is created to record these data.
Figure 5-37 illustrates these outcomes for the GBI example after the goods
issue for the fi rst delivery has been posted. As the fi gure indicates, the cost of
each bike is $1,400, and the cost of each shirt is $15. Therefore, the inventory
accounts for bikes and t-shirts are credited by $42,000 ($1,400 30) and $1,500
($15 100), respectively, and the cost of goods sold account is debited by the
sum of the two, $43,500. A similar impact will be recorded after the goods issue
is posted for the second delivery in June. Note that the other accounts listed
Figure 5-37 are relevant in later steps in the process. In addition, a controlling
document may be created if a management accounting (controlling) relevant
activity, such as profi tability analysis is in use.

Figure 5-37: FI impact of the shipping step

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