Hotwax makes surfboard wax in a single operation. This period, Hotwax purchased $73,000 in raw materials. Its production department requisitioned $60,500 of those materials for use in production. Prepare journal entries to record its purchase of raw materials and direct materials.

a. For raw material purchased:

Debit: Inventory - raw materials with $73,000,

Credit: cash with $73,00.

b. For raw material issued:

Debit: Work-in-Progress with $60,500

Credit: Inventory - raw materials with $65,500

Explanation:

Hotwax's journal entries for this will appear as follows in the book.

Details                                             Dr ($)                   Cr ($)

Inventory - Raw materials             73,000

Cash                                                                           73,000

Being the purchase of raw materials inventory in cash

Work-in-Progress                           60,500

Inventory - Raw materials                                          60,500

Being the issue of raw materials for production