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Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094

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BuyFindarrow_forward

Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094
Textbook Problem

Cost of materials issuances under the FIFO method

An incomplete subsidiary ledger of materials inventory for May is as follow:

images

a. Complete the materials issuances and balances for the materials subsidiary ledger under FIFO.

h. Determine the materials inventory balance at the end of May.

c. Journalize the summary entry to transfer materials to work in process.

d. Explain how the materials ledger might be used as an aid in maintaining inventory quantities on hand.

(a)

To determine

Issuance of materials

The material storeroom releases raw materials for used in manufacturing process when a material requisition is received. The summary of material requisition aids as a basis for recording materials used in the process.

To prepare: the subsidiary ledger under FIFO for material issuance and balances.

Explanation

Table (1)

Working note:

The May 10th issuance (FIFO) is calculated as follows:

Units Rate ($) Amount ($)
285 30 8,550
80 32 2,560

(b)

To determine
material inventory balance at the end of May.

(c)

To determine

To record: Journal entry for issuance of materials.

(d)

To determine

To explain: the use of material ledger in maintaining inventory quantities on hand.

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