A Firm That Has Implemented JIT Had the Following Transactions $\begin{array}{ll}\text { Materials and In Process Inventory } & 40,000 \\\quad \text { Accounts Payable } &\quad\quad\quad 40,000\end{array}$

question 61

Multiple Choice

A firm that has implemented JIT had the following transactions:
1. Materals were purchased an account for $40,000
2. Materials were placed inta production.
3. Actual direct labour costs were $6,000.
4. Actual averhead costs were $40,000.
5. Conversion costs applied were $42,000.
6. All work was completed for the month.
7. All completed work was sald.
8. The variance is recoprized.
-Refer to the figure.What will be the entry to record material purchases using the backflush approach?

• A)\(\begin{array}{ll}
• \text { Materials and In Process Inventory } & 40,000 \\
• \quad \text { Accounts Payable } &\quad\quad\quad 40,000
• \end{array}\)
• B)\(\begin{array}{llr}
• \text { Materials Inventory } &40,000\\
• \text { Accounts Payable } &&40,000\\
• \end{array}\)
• C)\(\begin{array}{llr}
• \text { Accounts Payable } &40,000\\
• \text { Materials and In Process Inventory } &&40,000\\
• \end{array}\)
• D)\(\begin{array}{llr}
• \text { Accounts Payable } &40,000\\
• \text { Materials Inventory} &&40,000\\
• \end{array}\)

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Definitions:

Sales on Account

Transactions where goods or services are sold and payment is deferred to a later date, creating accounts receivable.

Create Invoices

The act of generating a document that specifies the amount owed by a customer for goods or services provided.

Credit Sales

Transactions where goods or services are sold to a customer with payment to be received at a later date.

Create Invoices

The process of generating a bill for products or services rendered, detailing amounts owed by the customer to the business.