ECONOMICS

Detailed explanation-1: -Recording acquisition of raw materials is apart of accumulating manufacturing costs. Manufacturing costs are generally incurred in one period and recorded in a subsequent period. The purchases account is credited for all raw materials purchase returns and allowances.

Detailed explanation-2: -When a manufacturing company purchases raw materials to be used in manufacturing finished goods, it will typically credit accounts payable and debit raw materials inventory (answer B).

Detailed explanation-3: -Raw materials include goods that require further processing (such as steel, plastic beads, chemicals) as well as finished goods used in their received form (such as fasteners, containers, shipping materials).

Detailed explanation-4: -Beginning Raw Materials Inventory = (COGS + Ending Raw Materials Inventory) – Raw Materials Inventory Purchases. For example, imagine a manufacturer produces lanterns using iron. Iron costs $50 a unit, and the business ended the last accounting period with 1, 000 units in stock.