Final answer:
Two journal entries are required to reflect the purchase and use of materials in production. The purchase is recorded by debiting raw materials inventory and crediting accounts payable. The usage is recorded by debiting work-in-process and manufacturing overhead for direct and indirect materials, respectively, while crediting raw materials inventory.
Step-by-step explanation:
To record the purchase of raw materials on credit, the journal entry will be:
- Debit raw materials inventory $81,000
- Credit accounts payable $81,000
This entry reflects the increase in raw materials inventory and the corresponding obligation to pay the supplier in the future.
To record the usage of raw materials in production, two separate entries are needed:
- Debit work-in-process (direct materials) $60,000
- Credit raw materials inventory $60,000
And for the indirect materials:
- Debit manufacturing overhead (indirect materials) $6,000
- Credit raw materials inventory $6,000
The first entry moves the cost of direct materials from inventory to work-in-progress, signifying their use in production. The second entry allocates the cost of indirect materials to manufacturing overhead, where it will be applied to production using a predetermined overhead rate.