Question

Clarksen Company uses a process costing system. The company requisitioned $93,000 of materials for Department A and $67,000 of materials for Department D. The entry to record the use of the direct materials by these two departments is: Multiple Choice Debit Raw Materials Inventory $160,000; credit Accounts Payable $160,000. Debit Work in Process Inventory—Dept. A $93,000; debit Work in Process Inventory—Dept. D $67,000; credit Raw Materials Inventory $160,000. Debit Factory overhead $160,000; credit Raw Materials Inventory $160,000. Debit Raw Materials Inventory—Dept. A $93,000; debit Raw Materials Inventory—Dept. D $67,000; credit Work in Process Inventory $160,000. Debit Work in Process Inventory—Dept. A $93,000; debit Work in Process Inventory—Dept. D $67,000; credit Accounts Payable $160,000.

Answer 1

Answer:

The correct journal entries should be:

Department A:

Dr Work in progress inventory 93,000

    Cr Raw materials inventory 93,000

Department D:

Dr Work in progress inventory 67,000

    Cr Raw materials inventory 67,000

Explanation:

Raw materials is an asset account with a debit balance, and since we must decrease it, we have to credit the amounts. Work in progress (WIP) inventory is an asset account so it has a debit balance.