Select your language

Suggested languages for you:
Log In Start studying!
Answers without the blur. Just sign up for free and you're in → Illustration

Q17-7RQ

Expert-verified
Horngren'S Financial And Managerial Accounting
Found in: Page 937

Short Answer

Question: Give the journal entry for raw materials purchased on account. Explain how this transaction affects the accounting equation.

Answer

Date

Particulars

Debit ($)

Credit ($)

Raw material inventory

XXX

Accounts payable

XXX

This transaction increases the raw material inventory (Assets) and increases the liabilitiy (accounts payable) of the company

See the step by step solution

Step by Step Solution

Step 1: Raw material inventory

Raw material means the material used by the company to manufacture the finished goods. It is shown as the current assets in the balance sheet of the company. The purchase of raw material increases its balance in the company’s balance sheet.

Step 2: Accounts payable

Accounts payable means the amount due to vendors for the goods or services received that have not yet been paid for. It is treated as the current liability in the balance sheet of the company. The purchase of raw material on account increases the balance of accounts payable on the liabilities’ side of the company’s balance sheet.

Icon

Want to see more solutions like these?

Sign up for free to discover our expert answers
Get Started - It’s free

Recommended explanations on Business-studies Textbooks

94% of StudySmarter users get better grades.

Sign up for free
94% of StudySmarter users get better grades.