Question

During the current month, a company that uses job order costing purchases $82,000 in raw materials for cash. It then uses $23,000 of raw materials indirectly as factory supplies and uses $50,600 of raw materials as direct materials. Prepare journal entries to record these three transactions

Answer 1

Answer:

See the explanation below:

Explanation:

Details                                              Dr ($)                Cr ($)          

Inventory of raw materials            82,000

Cash                                                                         82,000

Being the purchase of raw materials                                          

Factory overhead                          23,000

Inventory of raw materials                                        23,000

Being the raw materials used indirectly as factory supplies      

Work-in-Progress                          50,600

Inventory of raw materials                                        50,600

Being the raw materials used directly in production                    

Answer 2

Answer:

Dr. Material Inventory $82,000

Cr. Cash                       $82,000

Dr. Work in Process Inventory $50,600

Dr. Manufacturing Overhead   $23,000

Cr. Material Inventory               $82,000

Explanation:

Purchases of Inventory is recorded in the material inventory account by debit entry, because inventory is an asset and it requires a debit entry to increase the inventory level. cash is paid so it is credited.

Direct raw material used will be transferred to Work in process account and Indirect raw material used will be transferred to Manufacturing overhead account by a debit the these accounts and credit to material Inventory account.