Question

Materials May 1: Balance $26,600; May 31: Requisitions $107,000. What is the correct entry on May 31?

a) Debit: Requisitions $80,400; Credit: Materials $80,400
b) Debit: Requisitions $107,000; Credit: Materials $107,000
c) Debit: Materials $107,000; Credit: Requisitions $107,000
d) Debit: Materials $80,400; Credit: Requisitions $80,400

Answer 1

The correct journal entry for May 31 is to debit Requisitions and credit Materials by $107,000, reflecting the materials used.

Step-by-step explanation:

The correct entry for May 31, given the information that the balance of materials was $26,600 at the beginning of May and that there were requisitions of $107,000 by the end of May, would involve decreasing the Materials account and increasing the Requisitions account by the amount of materials used. Since we have no information about additional purchases or adjustments to the Materials account, the whole amount requisitioned would typically be 'used' from the existing Materials balance. Therefore, the correct entry would be:

Debit: Requisitions $107,000; Credit: Materials $107,000

This entry reflects that the Materials account is reduced by the amount of requisitions which are then moved to the Requisitions or Work in Process account, or whichever account tracks the cost of materials that have been used in the production process.