The Journal Entry to Issue $530 of Direct Materials and $40

question 42

Multiple Choice

The journal entry to issue $530 of direct materials and $40 of indirect materials to production involves debit(s) to the:

• A) Manufacturing overhead account for $570.
• B) Work in process inventory account for $530 and Manufacturing overhead account for $40.
• C) Work in process inventory account for $570.
• D) Work in process inventory account for $530 and Finished goods inventory account for $40.

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Definitions:

Lower of Cost or Market

A valuation rule that requires inventory to be recorded at the lower of the original cost or the current market value.

Periodic Inventory System

An inventory accounting system where the inventory count is physically conducted at specific periods, leading to adjustments in the accounts at each period end.

Inventory Cost

The total cost associated with acquiring, storing, and preparing goods for sale, including purchase price, storage, and handling costs.

Direct Method

A way of preparing the cash flow statement where actual cash flows from operating activities are listed directly.