Question

Squirrel Co. operates in a lean manufacturing environment. For June production, Squirrel purchased 6,000 units of raw materials at $6.00 per unit on account. The journal entry required to record this transaction is:
a. Raw Materials Inventory36,000
Accounts Payable36,000

b. Raw and In Process Inventory36,000
Accounts Payable36,000

c. Finished Goods36,000
Accounts Payable36,000

d. Cost of Goods Manufactured36,000
Accounts Payable36,000

Answer 1

Answer:

At the time of purchase of raw material inventory,

Raw material inventory account will debit and accounts payable account will credit.

Therefore, the Journal entry for this transaction is as follows:

Raw Materials Inventory Account    Dr. $36,000

To Accounts Payable                                           $36,000

(To record the purchase of raw material on account)

Workings:

Raw material Inventory = Units of raw material purchased × Price per unit

                                       = 6,000 × $6

                                       = $36,000