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, paid in cash, 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 issuance of materials to production is: debit raw materials inventory $195,000; credit accounts payable $195,000. debit work in process inventory $165,000; debit factory overhead $30,000; credit raw materials inventory $195,000. debit finished goods inventory $195,000; credit raw materials inventory $195,000. debit work in process inventory $195,000; credit raw materials inventory $195,000. debit raw materials inventory $195,000; credit work in process inventory $195,000.

Answer 1

Answer: The rigth answer is debit work in process inventory $165,000; debit factory overhead $30,000; credit raw materials inventory $195,000.

Explanation: According to the initial text the issued materials to production were $195,000 so we need to make a credit to the raw materials inventory to represent the use of those materials, therefhore the balance of the raw materials inventory will be the $3,000 which means the purchase of $198,000 less the use to production of $195,000.

Also, we have to make the entry of the work in process, knowing that the initial text is clear to mark that of the total amount of $195,000 only $30,000 are indirect materials. Therefhore, those indirect materials are registered as factory overhead in debit for an amount of $30,000 and the rest of the materials will be a debit work in process inventory for an amount of $165,000.

Answer 2

The best answer for this would be:

debit raw materials inventory $195,000; credit accounts payable $195,000

This is because this should be the next journal entry to record the purchase of materials. This cost accounting system puts emphasis on updated cost of the materials and generally the finished good inventories.