Question

A company that uses a job order costing system would make the following entry to record the flow of direct materials into production:a. debit Work in Process Inventory, credit Cost of Goods Sold.b. debit Work in Process Inventory, credit Raw Materials Inventory.c. debit Work in Process Inventory, credit Factory Overhead.d. debit Factory Overhead, credit Raw Materials Inventory.e. debit Finished Goods Inventory, credit Raw Materials Inventory.

Answer 1

Answer:

b. debit Work in Process Inventory, credit Raw Materials Inventory.

Explanation:

In job order costing the cost of each job is part of work in process, up till it is fully completed.

Therefore, when raw materials are added into production, that is the first step of production the raw material inventory decreases, for which inventory of raw material is credited, and with this the work in process increases, as now work will be performed on such inventory.

For this work in process is debited.

Thus, the correct entry for this is:

Debit the Work in process inventory because it is increased,

Credit the raw material inventory as it has decreased.