Question

Portside Watercraft uses a job order costing system. During one month Portside purchased $173,000 of raw materials on credit; issued materials to production of $164,000 of which $24,000 were indirect. Portside incurred a factory payroll of $95,000, of which $25,000 was indirect labor. Portside uses a predetermined overhead rate of 170% of direct labor cost. The journal entry to record the issuance of materials to production is:
1. Debit Raw Materials Inventory $195,000; credit Work in Process Inventory $195,000.2. Debit Work in Process Inventory $140,000; debit Factory Overhead $24,000; credit Raw Materials Inventory $164,000.3. Debit Raw Materials Inventory $153,000; credit Accounts Payable $153,000.4. Debit Finished Goods Inventory $140,000; credit Raw Materials Inventory $140,000.5. Debit Work in Process Inventory $140,000; debit Raw Materials Inventory $24,000; credit Materials Inventory $164,000.

Answer 1

Answer:

2. Debit Work in Process Inventory $140,000; debit Factory Overhead $24,000; credit Raw Materials Inventory $164,000

Explanation:

The work in process receive 140,000 direct materials

the indirect materials goes in the factory overhead, to later compare and determinate the applied or underapplied overhead.

the raw materials inventory account decrease by the amount used during the period.