Question

Hotwax makes surfboard wax in a single operation. This period, Hotwax purchased $62,000 in raw materials. Its production department requisitioned $50,000 of those materials for use in production.
Prepare journal entries to record its purchase of raw materials and direct materials.

Answer 1

Answer:

Purchase of raw materials

Raw Materials $62,000 (debit)

Cash $62,000  (credit)

Direct materials requisation

Work - In - Processs : Production Department $50,000 (debit)

Raw Materials $50,000 (credit)

Explanation:

Purchase of raw materials

Raw Materials $62,000 (debit)

Cash $62,000  (credit)

Recognise Asset - Raw Materials and De-recognise Asset - Cash

Direct materials requisation

Work - In - Processs : Production Department $50,000 (debit)

Raw Materials $50,000 (credit)

Recognise Cost of Production in Work in Process (Production department) and De-recognise the Asset - Raw Materials