Bard Manufacturing uses a job order cost accounting system. During one month Bard purchased $198,000 of raw materials on credit; issued materials to production of $195,000 of which $30,000 were indirect. Bard incurred a factory payroll of $150,000, paid in cash, of which $40,000 is classified as indirect labor. Bard uses a predetermined overhead application rate of 150% of direct labor cost. The journal entry to record the purchase of materials is:

Question

Quizplus · Accepted Answer

The purchase of raw materials on credit is recorded by debiting the Raw Materials Inventory account and crediting the Accounts Payable account. This is because the materials are not yet used in production and are still considered as raw materials inventory.

Bard Manufacturing Uses a Job Order Cost Accounting System