Cost of Materials Issuances Under the FIFO Method An incomplete subsidiary ledge
ID: 2330035 • Letter: C
Question
Cost of Materials Issuances Under the FIFO Method
An incomplete subsidiary ledger of materials inventory for May is as follows:
a. Complete the materials issuances and balances for the materials subsidiary ledger under FIFO.
b. Determine the materials inventory balance at the end of May.
$
c. Journalize the summary entry to transfer materials to work in process.
d. Comparing as reported in the materials ledger with predetermined order points would enable management to order materials before a(n) causes idle time.
Received Issued Balance ReceivingReport
Number Quantity Unit
Price Materials
Requisition
Number Quantity Amount Date Quantity Unit
price Amount May 1 370 $5 $1,850 27 260 $7 May 4 105 420 $ May 10 33 170 9 May 21 118 250 May 27
Explanation / Answer
Answer:
A)
RECEIVED
ISSUED
BALANCE
Receiving
Materials
Report
Unit
Requisition
Unit
Number
Quantity
Price
Number
Quantity
Amount
Date
Quantity
Price
Amount
1-May
370
$5.00
$1,850
27
260
$7.00
4-May
370
$5.00
$1,850
260
$7.00
$1,820
105
370
1850
10-May
210
$7.00
$1,470
50
350
33
170
9
21-May
210
7
$1,470
170
9
$1,530
118
210
1470
27-May
130
9
$1,170
40
360
Balance
130
1170
_______________________________________________________________
B)
Determine the materials inventory balance at the end of May.=$1170
_______________________________________________________________________
C)
Journalize the summary entry to transfer materials to work in process
Date
Description
Debit $
Credit $
31-May
Work in progress inventory
(1850+350+1470+360)
4030
Raw material Inventory
4030
( to record the transfer of material in to
work in progress account)
_________________________________________
D)
Comparing quantities on hand as reported in the materials ledger with predetermined order points enables management to order materials before a lack of materials causes idle time. Also, the subsidiary ledger can include columns for recording quantities ordered, so that management can have easy access to information about materials on order.
RECEIVED
ISSUED
BALANCE
Receiving
Materials
Report
Unit
Requisition
Unit
Number
Quantity
Price
Number
Quantity
Amount
Date
Quantity
Price
Amount
1-May
370
$5.00
$1,850
27
260
$7.00
4-May
370
$5.00
$1,850
260
$7.00
$1,820
105
370
1850
10-May
210
$7.00
$1,470
50
350
33
170
9
21-May
210
7
$1,470
170
9
$1,530
118
210
1470
27-May
130
9
$1,170
40
360
Balance
130
1170