Question

During the current month, a company that uses a job order cost accounting system purchases $50,000 in raw materials for cash. It then uses $12,000 of raw materials indirectly as factory supplies and uses $32,000 of raw materials as direct materials. Prepare entries to record these three transactions in the given order.
Record the raw materials purchase for $50,000.
Record the raw materials used indirectly in production.
Record the raw materials used directly in production.

Answer 1

Answer:

1. Dr Raw materials inventory 50,000

Cr Cash 50,000

2. Dr Factory overhead 12,000

Cr Raw materials inventory 12,000

3. Dr Work in process inventory32,000

Cr Raw materials inventory 32,000

Explanation:

Preparation or Journal entries

1. Preparation of the journal entry to record the raw materials purchase for $50,000

Dr Raw materials inventory 50,000

Cr Cash 50,000

2. Preparation of the journal entry to Record the raw materials used indirectly in production.

Dr Factory overhead 12,000

Cr Raw materials inventory 12,000

3. Preparation of the journal entry to Record the raw materials used directly in production.

Dr Work in process inventory32,000

Cr Raw materials inventory 32,000