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Survey of Accounting (Accounting I)

8th Edition
Carl Warren
ISBN: 9781305961883

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Survey of Accounting (Accounting I)

8th Edition
Carl Warren
ISBN: 9781305961883
Textbook Problem

Cost of materials issuances
An incomplete subsidiary ledger of wire cable for July is as follows
a. Complete the materials issuances and balances for the wire cable subsidiary ledger. Assume a first-in, first-out cost flow.
b.Determine the balance of wire cable at the end of July.
c Determine the total amount of materials transferred to Work in Process for July.
d.Explain how the materials ledger might be used as an aid in maintaining inventory quantities on hand.

To determine

(a)

Concept Introduction:

Material ledger accounts are maintained for controlling purpose. Separate ledgers are maintained for different materials. The materials which are received or issued based on supplier invoice and requisition issued respectively are going through this ledger.

To compute:

The material issuances and balances for the wire cable subsidiary ledger.

Explanation

First in first out means material which is received first should be issued first.

On Jul 10, total quantity of 480 units has issued. FIFO method should be used for issuing 480 units so, opening balance of 250 units at $6 per unit is used first than balance of 230 units should be issued from purchased material and should be priced at $7.5 per unit. So, the value of issued material is

  Total amount=(opening unit×unit price)+(balance unit received×received unit price)=(250units×$6)+(230units×$7.5)=$1,500+$1,725=$3,225

On Jul 26, total quantity of 650 units has issued

To determine

(b)

Concept Introduction:

Material ledger accounts are maintained for controlling purpose. Separate ledgers are maintained for different materials. The materials which are received or issued based on supplier invoice and requisition issued respectively are going through this ledger.

To compute:

The wire cable balance at the end of July.

To determine

(c)

Concept Introduction:

Material ledger accounts are maintained for controlling purpose. Separate ledgers are maintained for different materials. The materials which are received or issued based on supplier invoice and requisition issued respectively are going through this ledger.

To compute:

The total amount of July transfer to work in progress.

To determine

(d)

Concept Introduction:

Material ledger accounts are maintained for controlling purpose. Separate ledgers are maintained for different materials. The materials which are received or issued based on supplier invoice and requisition issued respectively are going through this ledger.

To explain:

The way in which the material ledger can use to preserve stock quantities on hand.

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