The Journal Entry to Record the Use of Direct Materials

question 144

Multiple Choice

The journal entry to record the use of direct materials for Aztec Bromac is:

• A) \(\begin{array}{ll}
• \text { Dr Work in Process Inventory }&\$30,240\\
• \text { Cr DM Efficiency Variance } & \$ 3,240 \\
• \text { Cr Direct Materials Inventory } & \$ 27,000
• \end{array}\)
• B) \(\begin{array}{ll}
• \text { Dr Work in Process Inventory } & \$ 30,240 \\
• \text { Dr DM Efficiency Variance } & \$ 3,240\\
• \text { Cr Direct Materials Inventory }&\$33,480
• \end{array}\)
• C)\(\begin{array}{ll}
• \text {Dr Direct Materials Inventory }&\$30,240\\
• \text {Cr DM Efficiency Variance }&\$3,240\\
• \text {\( \mathrm{Cr} \) Work in Process Inventory}&\$27,000\\
• \end{array}\)
• D) \(\begin{array}{ll}
• \text { Dr Work in Process Inventory }&\$30,000\\
• \text { Cr DM Efficiency Variance } & \$ 3,240 \\
• \text { Cr Direct Materials Inventory } & \$ 26,760
• \end{array}\)

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Definitions:

Inherited Property

Property one receives from a deceased person's estate, subject to specific tax rules and basis determinations.

Inventory

Goods and materials a business holds for the ultimate goal of resale or production.

Section 1231

This is a section of the U.S. Internal Revenue Code that provides favorable tax treatment for gains and losses on the sale or exchange of certain types of property used in a trade or business.

Capital Losses

Capital losses occur when the sale of a capital asset, such as stocks or real estate, results in a loss, which can offset capital gains for tax purposes.