Question

Minstrel Manufacturing uses a job order costing system. During one month, Minstrel purchased $198,000 of raw materials on credit; issued materials to production of $195,000 of which $30,000 were indirect. Minstrel incurred a factory payroll of $150,000, of which $40,000 was indirect labor. Minstrel uses a predetermined overhead rate of 150% of direct labor cost. The journal entry to record the purchase of materials is: Debit Raw Materials Inventory $198,000; credit Work in Process Inventory $198,000. Debit Work in Process Inventory $198,000; credit Accounts Payable $198,000. Debit Raw Materials Inventory $198,000; credit Finished Goods Inventory $198,000. Debit Work in Process Inventory $195,000; credit Raw Materials Inventory $195,000. Debit Raw Materials Inventory $198,000; credit Accounts Payable $198,000.

Answer 1

Raw Material Inventory A/c Dr. $198,000

To Accounts Payable A/c $198,000

That is the last option of all the given options.

Step-by-step explanation:

When inventory is purchased then, effect of such purchase will be:

Increase in inventory with the amount of inventory purchased for this, Raw Material Inventory will be debited,

When inventory is purchased on cash then cash is decreased and thus cash is credited, or

It is purchased on credit, then accounts payable liability is created as there will be a liability to pay to such amount to creditors back with the amount of inventory.

Thus correct entry will be:

Raw Material Inventory A/c Dr. $198,000

To Accounts Payable A/c $198,000