How to Record Tungsten Carbide Purchased and Used in Production in July
The Correct Journal Entry
Accounts Payable Control $30,000
Work in Process-Molding: This account is debited for the total cost of tungsten carbide used in production.
Accounts Payable Control: This account is credited for the total cost of tungsten carbide purchased.
Calculation:
Total tungsten carbide purchased = 500 kg * $60/kg = $30,000
Since there is no beginning or ending inventory of tungsten carbide, all that was purchased is assumed to be used in production.
Therefore, the entire cost of tungsten carbide purchased becomes part of the Work in Process-Molding account.
The other options provided are incorrect because:
- Option A and B credit "Work in Process-Molding" for less than the cost of tungsten carbide purchased.
- Option C debits "Accounts Payable Control" for $2,400 instead of $30,000.