Portside Watercraft uses a job order costing system. During one month Portside p
ID: 2584017 • Letter: P
Question
Portside Watercraft uses a job order costing system. During one month Portside purchased $173,000 of raw materials on credit; issued materials to production of $164,000 of which $24,000 were indirect. Portside incurred a factory payroll of $95,000, of which $25,000 was indirect labor. Portside uses a predetermined overhead rate of 170% of direct labor cost. The journal entry to record the issuance of materials to production is:
Multiple Choice
1. Debit Raw Materials Inventory $195,000; credit Work in Process Inventory $195,000.
2. Debit Work in Process Inventory $140,000; debit Factory Overhead $24,000; credit Raw Materials Inventory $164,000.
3. Debit Raw Materials Inventory $153,000; credit Accounts Payable $153,000.
4. Debit Finished Goods Inventory $140,000; credit Raw Materials Inventory $140,000.
5. Debit Work in Process Inventory $140,000; debit Raw Materials Inventory $24,000; credit Materials Inventory $164,000.
Explanation / Answer
2. Debit Work in Process Inventory $140,000; debit Factory Overhead $24,000; credit Raw Materials Inventory $164,000.