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Chapter 17: Q17-7RQ (page 937)

Question: Give the journal entry for raw materials purchased on account. Explain how this transaction affects the accounting equation.

Short Answer

Expert verified

Answer

Date

Particulars

Debit ($)

Credit ($)

Raw material inventory

XXX

Accounts payable

XXX

This transaction increases the raw material inventory (Assets) and increases the liabilitiy (accounts payable) of the company

Step by step solution

01

Raw material inventory

Raw material means the material used by the company to manufacture the finished goods. It is shown as the current assets in the balance sheet of the company. The purchase of raw material increases its balance in the company鈥檚 balance sheet.

02

Accounts payable

Accounts payable means the amount due to vendors for the goods or services received that have not yet been paid for. It is treated as the current liability in the balance sheet of the company. The purchase of raw material on account increases the balance of accounts payable on the liabilities鈥� side of the company鈥檚 balance sheet.

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Most popular questions from this chapter

Back Country manufactures backpacks. Its plant records include the following materials-related data

Journalize the entries to record the transactions, post to the Raw Materials Inventory account, and determine the ending balance in Raw Materials Inventory.

Question: The following information pertains to Smith Company for the year:

Estimated manufacturing overhead

\(500,000

Actual manufacturing overhead

\)550,000

Estimated direct labor hours

10,000 hours

Actual direct labor hours

10,500 hours

13. Calculate the predetermined overhead allocation rate using direct labor hours as the allocation base.

14. Determine the amount of overhead allocated during the year. Record the journal entry.

15. Determine the amount of underallocated or overallocated overhead. Record the journal entry to adjust Manufacturing

Overhead.

Question: Would the following companies most likely use a job order costing system or a process costing system?

1. Paint manufacturer

2. Print shop

3. Caterer

4. Soft drink bottler

5. Yacht builder

Following is a list of cost system characteristics and sample companies. Match each to either job order costing or process costing.

j. A governmental agency that takes bids for specific items it utilizes where each item requires a separate bid.

The manufacturing records for Sporty Kayaks at the end of the 2018 fiscal year show the following information about manufacturing overhead:

Overhead allocated to production

\(409,200

Actual manufacturing overhead cost

432,000

Predetermined overhead allocation rate

\)44 per machine hours

Requirements

2. Was manufacturing overhead overallocated or underallocated for the year, and by how much?
See all solutions

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