Question

On August 4, Rothchild Company purchased on account 12,000 units of raw materials at $14 per unit. During August, raw materials were requisitioned for production as follows: 5,000 units for Job 40 at $8 per unit and 6,200 units for Job 42 at $14 per unit.
Required:
Journalize the entry on August 4 to record the purchase and on August 31 to record the requisition from the materials storeroom.

Answer 1

Answer and Explanation:

The journal entries are shown below:

On Aug 4

Raw Materials   (12,000 units × $14) $168,000  

            To Accounts Payable   168,000

(Being the raw material purchased is recorded)

For recording this we debited the raw material as it increased the assets and credited the account payable as it also increased the liabilities

On Aug 31

Work in Process Dr $126,800  

           To Raw materials inventory  $126,800

($5,000 × $8) + ($6,200 × $14)  

(Being the requisition is recorded)

For recording this we debited the work in process and credited the raw material inventory