Question

On August 1, Shead Corporation had $33,700 of raw materials on hand. During the month, the company purchased an additional $75,800 of raw materials. During August, $79,000 of raw materials were requisitioned from the storeroom for use in production. These raw materials included both direct and indirect materials. The indirect materials totaled $4,000. Prepare journal entries to record these events. Use those journal entries to answer the following questions: The credits to the Raw Materials account for the month of August total ____________.

Answer 1

To record the events, prepare journal entries: 1. On August 1, debit Raw Materials and credit Accounts Payable for $33,700. 2. When raw materials are purchased, debit Raw Materials and credit Accounts Payable for $75,800. 3. For requisition of raw materials, debit Work in Process for $75,000 and Manufacturing Overhead for $4,000 while crediting Raw Materials account. The credits to the Raw Materials account for the month of August total $154,800.

Step-by-step explanation:

To record the events mentioned, we need to prepare journal entries:

1. On August 1, record the raw materials on hand by debiting Raw Materials and crediting Accounts Payable. The journal entry would be:

Raw Materials $33,700
Accounts Payable $33,700

1. When raw materials are purchased, we need to debit Raw Materials and credit Accounts Payable. The journal entry for the purchases would be:

Raw Materials $75,800
Accounts Payable $75,800

1. For the requisition of raw materials from the storeroom, we need to record the usage of both direct and indirect materials. Since the indirect materials are given separately, we need to create two journal entries:

For direct materials:

Work in Process $75,000
Raw Materials $75,000

For indirect materials:

Manufacturing Overhead $4,000
Raw Materials $4,000

The total credits to the Raw Materials account for the month of August would be $75,800 + $75,000 + $4,000 = $154,800.