Question

Match the following activities to their effect on the general ledger accounts. Drag and drop application.

Answer 1

Answer:

1. Allocate overhead costs to jobs: Credit Factory Overhead.

2. Pay factory utilities: Debit Factory Overhead.

3. Purchase indirect material: Debit Raw Materials Inventory.

4. Use indirect materials: Credit Raw Materials Inventory.

5. Direct labor used: Debit Work in Process Inventory.

Explanation:

1. When you allocate overhead costs to jobs: Credit factory overhead. Factory overhead can be defined as cost incurred in the manufacturing process of finished goods and cannot be linked directly to the goods.

2. When you pay factory utilities: Debit factory overhead. Factory overhead can be defined as cost incurred in the manufacturing process of finished goods and cannot be linked directly to the goods.

3. When you purchase indirect material: Debit raw materials inventory. The raw materials inventory comprises of the overall cost of all resources such as component parts that a business has in stock which haven't been used for production of finished goods or work in process.

4. When you use indirect materials: Credit raw materials inventory. Raw materials inventory comprises of the overall cost of all resources such as component parts that a business has in stock which haven't been used for production of finished goods or work in process.

5. For direct labor used: Debit work in process inventory.