Question

Cline Manufacturing Company uses a job order system and maintains perpetual inventory records. The columns indicating the appropriate account(s) to be debited and credited for the transactions listed below. Fill the missing columns.
Transactions
1 Raw materials were purchased on account. Raw Materials Inventory Accounts Payable
2 Issued a check to Dixon Machine Shop for repair work on factory equipment. Accumulated Depreciation Accounts Payable
3 Direct materials were requisitioned for Job 280. Work in Process Inventory Raw Materials Inventory
4 Factory labor was paid as incurred. Factory Labor Factory Wages Payable
5 Recognized direct labor and indirect labor used.
6 The production department requisitioned indirect materials for use in the factory.
7 Overhead was applied to production based on a predetermined overhead rate of $8 per labor hour. Manufacturing overhead Accounts payable
8 Goods that were completed were transferred to finished goods.
9 Goods costing $80,000 were sold for $105,000 on account. Accounts Receivable Sales Revenue
10 Paid for raw materials purchased previously on account. Cost of Goods Sold Finished Goods Inventory

Answer 1

Answer:

5. Recognized direct labor and indirect labor used.

Debit Work in Process Inventory and Manufacturing Overhead.

Credit Factory Labor

Direct Labour is debited to the Work in Process Inventory account to show that they contributed directly. Both are credited to the Factory Labor account.

6. The production department requisitioned indirect materials for use in the factory.

Debit Manufacturing Overhead

Credit Raw Materials Inventory.

As the materials were indirect, they fall under the Manufacturing Overheads.

They were taken from the Raw Materials account so that should be credited.

8. Goods that were completed were transferred to finished goods.

Debit Finished Goods Inventory

Credit Work in Process Inventory

Both accounts are asset accounts so when taking from one you credit it and when giving the other you debit it. Goods were taken from the Work in Process account so it was credited.

10. Paid for raw materials purchased previously on account. (The answer for this transaction written in the question is for the previous transaction).

Debit Accounts Payable

Credit Cash.

The raw materials were.purchased on account making them a payable. As they have been paid the account must be reduced by debiting it. Cash will be credited as it is an asset that is reducing.