During March, $40,000 of direct material were requisitioned and used for Job A.

Question

During March, $40,000 of direct material were requisitioned and used for Job A. Direct labor of $20,000 and indirect labor of $5,000 were also incurred for Job A.  The Journal Entry to account for these transactions is

Debit Work In Process $60,000; Debit Salaries Expense $5,000; Credit Raw Materials $40,000; Credit Accrued Payroll $25,000

Debit Raw Materials $40,000; Debit Salaries Expense $25,000; Credit Work In Process $40,000; Credit Accrued Payroll $25,000

Debit Work In Process $40,000; Debit Salaries Expense $25,000; Credit Raw Materials $40,000; Credit Accrued Payroll $25,000

none of the above

Debit Work In Process $60,000; Debit Salaries Expense $5,000; Credit Raw Materials $40,000; Credit Accrued Payroll $25,000

Debit Raw Materials $40,000; Debit Salaries Expense $25,000; Credit Work In Process $40,000; Credit Accrued Payroll $25,000

Debit Work In Process $40,000; Debit Salaries Expense $25,000; Credit Raw Materials $40,000; Credit Accrued Payroll $25,000

none of the above

Explanation / Answer

Work in process includes raw material, direct labor and indirect labor

AMount to be debited to work in process = 40000 + 20000 + 5000 = 65000

Correct Journal:

Work In process A/c Dr 65000

To Raw material account 40000

To Direct labor A/c 20000

To Indirect labor A/c 5000

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