Portside Watercraft uses a job order costing system. During one month Portside purchased $173,000 of raw materials on credit; issued materials to production of $164,000, of which $24,000 were indirect. Portside incurred a factory payroll cost of $95,000, of which $25,000 was indirect labor. Portside uses a predetermined overhead rate of 170% of direct labor cost. The journal entry to record the issuance of materials to production is:
A. Debit Raw Materials Inventory $153,000; credit Accounts Payable $153,000.
B. Debit Work in Process Inventory $140,000; debit Factory Overhead $24,000; credit Raw Materials Inventory $164,000.
C. Debit Finished Goods Inventory $140,000; credit Raw Materials Inventory $140,000.
D. Debit Raw Materials Inventory $195,000; credit Work in Process Inventory $195,000.
E. Debit Work in Process Inventory $140,000; debit Raw Materials Inventory $24,000; credit Materials Inventory $164,000.
Answer: B
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