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

A) $396,750
B) ($402,040)
C) $402,040
D) ($396,750)

Raw Materials

Basic materials that are used to produce goods, finished products, or intermediate materials which are feedstock for future finished products.

Raw Materials Inventory

Stock of materials that are to be used in the production of goods, not yet processed or incorporated into finished products.