Uniq Works Purchased Raw Materials Amounting to $122,000 on Account

question 170

Multiple Choice

Uniq Works purchased raw materials amounting to $122,000 on account and $19,000 for cash. The materials will be used to manufacture upholstery for furniture manufacturers on a contract basis. Which of the following journal entries correctly records this transaction?

• A) \[\begin{array} { | l | r | r | }
• \hline \text { Accounts Payable } & 122,000 & \\
• \hline \text { Cash } & 19,000 & \\
• \hline \text { Raw Materials Inventory } & & 141,000 \\
• \hline
• \end{array}\]
• B) \[\begin{array} { | c | r | r | }
• \hline \text { Finished Goods Inventory } & 141,000 & \\
• \hline \text { Accounts Payable } & & 141,000 \\
• \hline
• \end{array}\]
• C) \[\begin{array} { | c | r | r | }
• \hline \text { Work-in-Process Inventory } & 141,000 & \\
• \hline \text { Accounts Payable } & & 141,000 \\
• \hline
• \end{array}\]
• D) \[\begin{array} { | l | r | r | }
• \hline \text { Raw Materials Inventory } & 141,000 & \\
• \hline \text { Cash } & & 19,000 \\
• \hline \text { Accounts Payable } & & 122,000 \\
• \hline
• \end{array}\]

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Definitions:

Net Operating Income

A company's income after operating expenses have been deducted but before income taxes and interest are subtracted.

Wheel Sets

Components consisting of a wheel and axle assembly used in various applications, notably in vehicles and machinery.

Variable Production Cost

Costs that vary in direct proportion to the level of production or volume of output.

Lost Contribution Margin

The amount of income forgone from not selling additional units, calculated as the unit selling price minus variable costs.