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Group A Problem 26-1A Objective: To account for materials in a job order cost ac

ID: 2579349 • Letter: G

Question

Group A Problem 26-1A Objective: To account for materials in a job order cost accounting syste January 20xx bjective 2 materials in ce, Raw ntory $23,200 Rawson Company shows the following transactions relating to its raw mat 20xX 12 Returned $600 of Material A and $1,700 of Marerial B, receiving credit. 22 Issued direct materials to production: Material A, $2,500; Material B Jan. 7 Purchased $18,500 of Material A and $46, 100 of Material B $44,700. 29 Issued $9,100 of Material A to production as indirect materials. Directions: 1. Enter a balance of $17.200 in the Raw Materials Inventory account (108) balances on materials ledger records as follows: Material A, $11,400; Material $5,800. B, 2. Journalize each of the January transactions. 3. Post to the Raw Materials Inventory account and the materials ledger records. 4. Compare the ending balance of the Raw Materials Inventory account with the toral of the ending balances of the materials ledger records. counting for Decision Making and Manufacturing Operations

Explanation / Answer

Answer (1) Balances of raw material inventory and materials are taken to their respective ledger accounts. (Refer to answer 3)

Answer (2)

Journal Entries

Date

Particulars

Debit Amount (in $)

Credit Amount (in $)

Year 20XX

Jan. 7

Raw Material Inventory (Material A +B)*

64,600

               Accounts Payable

64,600

Purchased material on account

Jan. 12

Accounts Payable

2,300

        Raw Material Inventory (Material A + B)**

2,300

Raw material returned

Jan. 22

Work in process inventory

47,200

         Raw material inventory (Material A + B)***

47,200

Transferred material to production

Jan. 29

Manufacturing overheads****

9,100

Raw material inventory (Material A)

9,100

Material A transferred to production as indirect material

*Raw Material Inventory (Material A +B)*= $ 18,500 + $ 46,100= $ 64,600.

**Raw Material Inventory (Material A +B) = $, 600 + $ 1,700= $ 2,300

*** Raw material inventory (Material A + B) = $ 2,500 + $ 44,700= $ 47,200

**** Manufacturing overheads: All the costs that are taken as indirect in production process are called as overhead. As, here material A (worth $ 9,100) is taken to production as indirect material, it is considered as manufacturing overhead.  

Answer (3)

Raw Material Inventory Account (108)

Debit Credit

Date

Particulars

Amount (in $)

Date

Particulars

Amount (in $)

Year 20XX

Year 20XX

Jan. 1

To balance (opening)

17,200

Jan. 12

By Accounts Payable

2,300

Jan. 7

To Accounts Payable

64,600

Jan. 22

By Work in process inventory

47,200

Jan. 29

By Manufacturing overheads

9,100

Jan. 31

By ending balance

23,200

Total

81800

Total

81800

   Material A Account

Debit Credit

Date

Particulars

Amount (in $)

Date

Particulars

Amount (in $)

Year 20XX

Year 20XX

Jan. 1

To balance (opening)

11,400

Jan. 12

By Accounts Payable

6,00

Jan. 7

To Accounts Payable

18,500

Jan. 22

By Work in process inventory

2,500

Jan. 29

By Manufacturing overheads

9,100

Jan. 31

By ending balance

17,700

Total

29,900

Total

29,900

                                                                  Material B Account

Debit Credit   

Date

Particulars

Amount (in $)

Date

Particulars

Amount (in $)

Year 20XX

Year 20XX

Jan. 1

To balance (opening)

5,800

Jan. 12

By Accounts Payable

1,700

Jan. 7

To Accounts Payable

46,100

Jan. 22

By Work in process inventory

44,700

Jan. 31

By ending balance

5,500

Total

51,900

Total

46,400

Answer (4)

Comparison of ending balances of Raw material inventory account with total of ending balances of materials ledger accounts

Account Name

Raw Material Inventory Account (108)

Material A Account

Material B Account

Total ending balances of Material A & B

($ 17,700+ 5,500)

Ending Balances

$ 23, 200

$ 17,700

$ 5,500

$ 23,200

Ending Balance of Raw Material Inventory Account = Total of ending balances of material A and B

                                                   

                                                                               $ 23,200 = $ 23,200

Note:

-Date for opening balances given in the question as additional information is assumed to be Jan. 1.

- It is not compulsory to use “To” on debit side of ledger accounts and “By” on credit side of ledger accounts.

Date

Particulars

Debit Amount (in $)

Credit Amount (in $)

Year 20XX

Jan. 7

Raw Material Inventory (Material A +B)*

64,600

               Accounts Payable

64,600

Purchased material on account

Jan. 12

Accounts Payable

2,300

        Raw Material Inventory (Material A + B)**

2,300

Raw material returned

Jan. 22

Work in process inventory

47,200

         Raw material inventory (Material A + B)***

47,200

Transferred material to production

Jan. 29

Manufacturing overheads****

9,100

Raw material inventory (Material A)

9,100

Material A transferred to production as indirect material