Gullett Corporation had $26,000 of raw materials on hand on November 1. During the month, the Corporation purchased an additional $75,000 of raw materials. The journal entry to record the purchase of raw materials would include a:
A) debit to Raw Materials of $101,000
B) credit to Raw Materials of $75,000
C) debit to Raw Materials of $75,000
D) credit to Raw Materials of $101,000

Question

Quizplus · Accepted Answer

The journal entry to record the purchase of raw materials would include a debit to Raw Materials for the amount of the purchase, which is $75,000 in this case. The credit side would be to Accounts Payable or Cash, depending on whether the company paid for the materials immediately or on credit. The total debit balance for Raw Materials would include the beginning balance of $26,000 plus the additional purchase of $75,000, for a total of $101,000, but this is not included in the journal entry for the purchase itself.

Gullett Corporation Had $26,000 of Raw Materials on Hand on November