When recording the raw materials purchases in transaction (a) above, the Cash account will increase (decrease) by:

A) ($501,500)
B) $501,500
C) $542,800
D) ($542,800)

Question

When recording the raw materials purchases in transaction (a) above, the Cash account will increase (decrease) by:A) ($501,500)B) $501,500C) $542,800D) ($542,800)

Julie Reyes · Accepted Answer

Final Answer : D, Explanation :  The raw materials were purchased on credit, therefore the Cash account is not affected in this transaction. The accounts payable account is credited for $542,800, representing the amount owed to the supplier for the raw materials purchased. Therefore, the Cash account will decrease by $542,800, resulting in a credit entry. The correct answer is D. Cash decreases by the actual cost of the raw materials purchased, which is AQ × AP = 59,000 kilos × $9.20 per kilo = $542,800.

When recording the raw materials purchases in transaction (a) above, the Cash account will increase (decrease) by:

A) ($501,500)
B) $501,500
C) $542,800
D) ($542,800)

Definitions

Learning Objectives

Learning Objectives

Related questions

When recording the raw materials purchases in transaction (a) above, the Cash account will increase (decrease) by:A) ($501,500) B) $501,500C) $542,800D) ($542,800)

Definitions

Learning Objectives

Learning Objectives

Related questions

When recording the raw materials purchases in transaction (a) above, the Cash account will increase (decrease) by:

A) ($501,500)
B) $501,500
C) $542,800
D) ($542,800)