Question

Indicate which account should be debited and which account should be credited. Raw materials worth $12,000 were issued for use in the Cutting Department.

Answer 1

To record the use of $12,000 in raw materials for the Cutting Department, Work in Process should be debited and Raw Materials Inventory should be credited.

Step-by-step explanation:

Journal Entry for Raw Materials Issued

When raw materials are issued for use in a department within a company, the accounting treatment involves two main accounts: Raw Materials Inventory and Work in Process (WIP) or Manufacturing Overhead, depending on whether the materials are direct or indirect. In this case, let's assume the raw materials are direct materials for the Cutting Department.

To record the issuance of raw materials worth $12,000, the following journal entry should be made:

• Debit the WIP account for the Cutting Department for $12,000
• Credit the Raw Materials Inventory account for $12,000

This entry reflects the transfer of $12,000 worth of raw materials from inventory to the production process. The debit to WIP increases the costs associated with production, while the credit to Raw Materials Inventory decreases the value of materials on hand.