Soledad Corporation had $36,000 of raw materials on hand on December 1. During the month, the Corporation purchased an additional $71,000 of raw materials. The journal entry to record the purchase of raw materials would include a:
A)credit to Raw Materials of $71,000
B)debit to Raw Materials of $71,000
C)credit to Raw Materials of $107,000
D)debit to Raw Materials of $107,000

Question

Quizplus · Accepted Answer

The journal entry to record the purchase of raw materials would include a debit to Raw Materials of $71,000, as this represents an increase in the raw materials inventory. A credit would be made to Accounts Payable or Cash depending on the payment method. Option A is not correct because a credit to Raw Materials would decrease the inventory, not increase it. Options C and D are incorrect because they represent an overstatement of the raw materials inventory since they include the beginning inventory balance of $36,000 in addition to the purchases.

Soledad Corporation Had $36,000 of Raw Materials on Hand on December