Answer:
Choice D) $ 110,000
Explanation:
S. No Account Debit Credit
1 Opening Inventory $ 42,000
Profit and Loss Appropriation Account $ 42,000
2 Raw Materials (Purchases) $ 68,000
Cash $ 68,000
3 Work In Process $ 75,000
Materials $ 70,000
Indirect Materials $ 5000
Materials Account
Debits
Opening Inventory $ 42,000
Purchases $ 68,000
Credits
Work In Process $ 70,000
Ending In Inventory $ 40,000
Total Credits $ 110,000
Only choice D is correct because
a) $ 75,000 contains both direct and indirect materials
c) $ 42,000 is the opening inventory which is a debit
b) $ 68,000 are the purchases which are again a debit to material account
Answer:
a) $75,000
Explanation:
Given data about Arvelo Corporation;
On November 1
Cost of raw materials at hand = $42,000
Purchases during the month = $68,000
Raw materials requisitioned from storeroom (direct and indirect) = $75,000
Balance of inventory = $42,000 + $68,000 - $75,000
= $35,000
For the inventory amount requisitioned from the storeroom, the entries to be posted on issuance
Dr Cost of sale $75,000
Cr Inventory (Raw materials) $75,000
Being entries to recognize inventory issued for use.
The credits to inventory account in the month (November) is $75,000.
