Johnson Production Company uses just-in-time production and accounting methods. On June 1, Johnson purchased $4,000 of raw materials on account. Which of the following journal entries correctly records this transaction?
A) Debit accounts payable for $4,000, credit Raw and in-process inventory for $4,000.
B) Debit $4,000 to Materials inventory, credit $4,000 to Accounts payable.
C) Debit $4,000 to Work in process inventory, credit $4,000 to Accounts payable.
D) Debit $4,000 to Raw and in-process inventory, credit $4,000 to Accounts payable.

Question

Quizplus · Accepted Answer

The correct journal entry to record the purchase of raw materials on account is to debit Raw and in-process inventory for the $4,000 purchase and credit Accounts payable for $4,000. Therefore, the correct choice is D. Choice A is incorrect because it incorrectly credits Raw and in-process inventory. Choice B is incorrect because it incorrectly debits Materials inventory. Choice C is incorrect because it incorrectly debits Work in process inventory.

Johnson Production Company Uses Just-In-Time Production and Accounting Methods