Question

A company that uses job order costing purchases $70,000 in raw materials for cash. It then uses $21,000 of raw materials as indirect materials and uses $42,700 of raw materials as direct materials. Prepare journal entries to record the (a) purchase of raw materials, (b) use of indirect materials, and (c) use of direct materials. Journal entry worksheet Record the raw materials purchase for $70,000, paid in cash. Notes Enter debits before credits;

Answer 1

Journal entries for purchasing raw materials, using indirect materials, and using direct materials involve recording the outflow of cash, the shift of materials to overhead, and the allocation of materials to the production process respectively.

Step-by-step explanation:

To record the purchase of raw materials, the journal entry would be:

• Debit Raw Materials 70,000
• Credit Cash 70,000

This entry reflects the acquisition of materials and the decrease in cash from the purchase.

For the use of indirect materials (which are part of factory overhead), the journal entry is:

• Debit Manufacturing Overhead 21,000
• Credit Raw Materials 21,000

Illustrating the allocation of indirect material costs to overhead.

Regarding the use of direct materials in production, the entry is:

• Debit Work in Process Inventory 42,700
• Credit Raw Materials 42,700

This indicates the incorporation of direct materials into the production process.