Group A Problem 26-1A Objective: To account for materials in a job order cost ac
ID: 2579349 • Letter: G
Question
Group A Problem 26-1A Objective: To account for materials in a job order cost accounting syste January 20xx bjective 2 materials in ce, Raw ntory $23,200 Rawson Company shows the following transactions relating to its raw mat 20xX 12 Returned $600 of Material A and $1,700 of Marerial B, receiving credit. 22 Issued direct materials to production: Material A, $2,500; Material B Jan. 7 Purchased $18,500 of Material A and $46, 100 of Material B $44,700. 29 Issued $9,100 of Material A to production as indirect materials. Directions: 1. Enter a balance of $17.200 in the Raw Materials Inventory account (108) balances on materials ledger records as follows: Material A, $11,400; Material $5,800. B, 2. Journalize each of the January transactions. 3. Post to the Raw Materials Inventory account and the materials ledger records. 4. Compare the ending balance of the Raw Materials Inventory account with the toral of the ending balances of the materials ledger records. counting for Decision Making and Manufacturing OperationsExplanation / Answer
Answer (1) Balances of raw material inventory and materials are taken to their respective ledger accounts. (Refer to answer 3)
Answer (2)
Journal Entries
Date
Particulars
Debit Amount (in $)
Credit Amount (in $)
Year 20XX
Jan. 7
Raw Material Inventory (Material A +B)*
64,600
Accounts Payable
64,600
Purchased material on account
Jan. 12
Accounts Payable
2,300
Raw Material Inventory (Material A + B)**
2,300
Raw material returned
Jan. 22
Work in process inventory
47,200
Raw material inventory (Material A + B)***
47,200
Transferred material to production
Jan. 29
Manufacturing overheads****
9,100
Raw material inventory (Material A)
9,100
Material A transferred to production as indirect material
*Raw Material Inventory (Material A +B)*= $ 18,500 + $ 46,100= $ 64,600.
**Raw Material Inventory (Material A +B) = $, 600 + $ 1,700= $ 2,300
*** Raw material inventory (Material A + B) = $ 2,500 + $ 44,700= $ 47,200
**** Manufacturing overheads: All the costs that are taken as indirect in production process are called as overhead. As, here material A (worth $ 9,100) is taken to production as indirect material, it is considered as manufacturing overhead.
Answer (3)
Raw Material Inventory Account (108)
Debit Credit
Date
Particulars
Amount (in $)
Date
Particulars
Amount (in $)
Year 20XX
Year 20XX
Jan. 1
To balance (opening)
17,200
Jan. 12
By Accounts Payable
2,300
Jan. 7
To Accounts Payable
64,600
Jan. 22
By Work in process inventory
47,200
Jan. 29
By Manufacturing overheads
9,100
Jan. 31
By ending balance
23,200
Total
81800
Total
81800
Material A Account
Debit Credit
Date
Particulars
Amount (in $)
Date
Particulars
Amount (in $)
Year 20XX
Year 20XX
Jan. 1
To balance (opening)
11,400
Jan. 12
By Accounts Payable
6,00
Jan. 7
To Accounts Payable
18,500
Jan. 22
By Work in process inventory
2,500
Jan. 29
By Manufacturing overheads
9,100
Jan. 31
By ending balance
17,700
Total
29,900
Total
29,900
Material B Account
Debit Credit
Date
Particulars
Amount (in $)
Date
Particulars
Amount (in $)
Year 20XX
Year 20XX
Jan. 1
To balance (opening)
5,800
Jan. 12
By Accounts Payable
1,700
Jan. 7
To Accounts Payable
46,100
Jan. 22
By Work in process inventory
44,700
Jan. 31
By ending balance
5,500
Total
51,900
Total
46,400
Answer (4)
Comparison of ending balances of Raw material inventory account with total of ending balances of materials ledger accounts
Account Name
Raw Material Inventory Account (108)
Material A Account
Material B Account
Total ending balances of Material A & B
($ 17,700+ 5,500)
Ending Balances
$ 23, 200
$ 17,700
$ 5,500
$ 23,200
Ending Balance of Raw Material Inventory Account = Total of ending balances of material A and B
$ 23,200 = $ 23,200
Note:
-Date for opening balances given in the question as additional information is assumed to be Jan. 1.
- It is not compulsory to use “To” on debit side of ledger accounts and “By” on credit side of ledger accounts.
Date
Particulars
Debit Amount (in $)
Credit Amount (in $)
Year 20XX
Jan. 7
Raw Material Inventory (Material A +B)*
64,600
Accounts Payable
64,600
Purchased material on account
Jan. 12
Accounts Payable
2,300
Raw Material Inventory (Material A + B)**
2,300
Raw material returned
Jan. 22
Work in process inventory
47,200
Raw material inventory (Material A + B)***
47,200
Transferred material to production
Jan. 29
Manufacturing overheads****
9,100
Raw material inventory (Material A)
9,100
Material A transferred to production as indirect material
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