The Accounts of Delphinia Dreams Inc During the Month, Direct Materials Amounting to $20,000 and Indirect

question 45

Multiple Choice

The accounts of Delphinia Dreams Inc. showed the following balances at the beginning of October: $$\begin{array} { | l | r | } \hline \text { Account } & \text { Debit } \\\hline \text { Raw Materials Inventory } & \$ 30,000 \\\hline \text { Work-in-Process Inventory } & 40,000 \\\hline \text { Finished Goods Inventory } & 50,000 \\\hline \text { Manufacturing Overhead } & 20,000 \\\hline\end{array}$$ During the month, direct materials amounting to $20,000 and indirect materials amounting to $5,000 was issued to production. What is the ending balance in the Work-in-Process Inventory account for the month of October?

• A) $40,000
• B) $60,000
• C) $20,000
• D) $25,000

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Definitions:

Overstated Inventory

A situation where the book value of inventory is recorded higher than its actual physical count or market value, potentially misleading financial statements.

Owner's Equity

The residual interest in the assets of a business after all liabilities are deducted, often considered the net worth of a business.

Inventory Turnover

A financial ratio indicating how many times a company's inventory is sold and replaced over a specified period, measuring efficiency in managing stock levels.

Merchandise Sold

The total goods that have been sold by a company, typically measured over a specific period like a fiscal quarter or year.