Andrew Industries purchased $165,000 of raw materials on account during the month of March. The beginning Raw Materials Inventory balance was $22,000, and the materials used to complete jobs during the month were $141,000 direct materials and $13,000 indirect materials.
- How should Andrews journalize the purchase of raw materials for March?

Question

Quizplus · Accepted Answer

The purchase of raw materials on account is recorded as a debit to Raw Materials Inventory and a credit to Accounts Payable. The journal entry is:
Debit Raw Materials Inventory $165,000
Credit Accounts Payable $165,000. Option A is incorrect because cash was not used to purchase the raw materials. Option B is incorrect because it debits Accounts Payable instead of Raw Materials Inventory. Option C is incorrect because it debits Raw Materials Inventory for more than the actual purchase amount. Option E is incorrect because it incorrectly credits Raw Materials Inventory instead of debiting it.

Andrew Industries Purchased $165,000 of Raw Materials on Account During