Question

Dek Inc. is a manufacturing firm. When direct materials are issued to production, which of the...

Dek Inc. is a manufacturing firm. When direct materials are issued to production, which of the following accounts should be debited?

raw materials inventory

work-in-process inventory

finished goods inventory

accounts payable
Business   Accounting   
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Answer #1

The correct answer is "Work-in-process inventory"

Reason:

When the direct materials are issued to production, the following entry is passed:

Date Account Title and Explanations Debit Credit
XX Work-in-process Inventory XX
Raw Materials Inventory XX
(Being direct materials issued to production)

Raw materials inventory is credited because we are not consuming the direct materials and work-in-process inventory is debited since we are currently in the process of manufacturing the finished goods. When the finished good will be manufactured, we will credit the work-in-process inventory and debit the finished goods inventory.  

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