Question

Which of the following best describes the journal entry to record the withdrawal of raw materials from the storeroom for use as direct and indirect materials in production?

a) Debit Raw Materials, Credit Cash
b) Debit Work in Process, Credit Raw Materials
c) Debit Manufacturing Overhead, Credit Raw Materials
d) Debit Finished Goods, Credit Raw Materials

Answer 1

The journal entry for raw materials used as direct materials in production is a debit to Work in Process and a credit to Raw Materials. For indirect materials, the entry is a debit to Manufacturing Overhead and a credit to Raw Materials.

Step-by-step explanation:

When raw materials are withdrawn from the storeroom for use in production, the journal entry varies depending on whether the materials are used as direct materials or indirect materials. For direct materials that are used in production directly tied to a product, the journal entry would be:

• Debit Work in Process
• Credit Raw Materials

This reflects the movement of raw materials into the actual production process, becoming part of the goods that are in process.

For indirect materials, which are not directly traceable to finished products, the journal entry would be:

• Debit Manufacturing Overhead
• Credit Raw Materials

These costs are then allocated to the units produced during a period using a predetermined overhead rate.