Minstrel Manufacturing uses a job order costing system. During one month, Minstrel purchased $198,000 of raw materials on credit; issued materials to production of $195,000 of which $30,000 were indirect. Minstrel incurred a factory payroll of $150,000, of which $40,000 was indirect labor. Minstrel uses a predetermined overhead rate of 150% of direct labor cost. The journal entry to record the purchase of materials is:
A. Debit Work in Process Inventory $195,000; credit Raw Materials Inventory $195,000.
B. Debit Raw Materials Inventory $198,000; credit Accounts Payable $198,000.
C. Debit Raw Materials Inventory $198,000; credit Work in Process Inventory $198,000.
D. Debit Raw Materials Inventory $198,000; credit Finished Goods Inventory $198,000.
E. Debit Work in Process Inventory $198,000; credit Accounts Payable $198,000.
Answer: B
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