Olson Corporation Constructs New Homes

Olson Corporation constructs new homes. Assume that Olson uses a job-order costing system. During May, the following transactions occurred:
1. Olson purchased $4,500 of lumber on account.
2. Olson used $3,750 of lumber in production and incurred 50 hours of direct labour hours at $15 per hour.
3. Depreciation of $1,500 on equipment used to build new houses was recorded.
4. A house that was completed last period at a cost of $150,000 was sold for $180,000 in cash.

-Refer to the figure.What debit or credit would be used to record the requisition of lumber for Olson include?

A) a credit to work in process of $4,500
B) a debit to materials inventory of $4,500
C) a credit to finished goods of $3,750
D) a debit to work in process of $3,750

Correct Answer:

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