On November 1, Arvelo Corporation Had $32,000 of Raw Materials

question 10

Multiple Choice

On November 1, Arvelo Corporation had $32,000 of raw materials on hand. During the month, the company purchased an additional $78,000 of raw materials. During November, $95,000 of raw materials were requisitioned from the storeroom for use in production. These raw materials included both direct and indirect materials. The indirect materials totaled $3,000. Prepare journal entries to record these events. Use those journal entries to answer the following questions:
-The journal entry to record the incurrence of the actual Manufacturing Overhead costs would include a:

• A) credit to Manufacturing Overhead of $60,000
• B) credit to Work in Process of $62,000
• C) debit to Work in Process of $62,000
• D) debit to Manufacturing Overhead of $60,000

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Definitions:

Fair-value Method

An accounting strategy used for valuing and assessing assets and liabilities based on current market prices or estimates.

Equity Method

An accounting technique used to assess the earnings of an investment in another company by recognizing the income earned proportional to ownership interest.

Accounting Principle

A guideline or rule that shapes the theoretical basis for accounting practices and financial reporting.

Intra-entity Gross Profits

Profits realized from transactions conducted within the same legal entity, often requiring elimination for accurate consolidated financial reporting.