The following is the current assets and current liabilities of AM Company as of December 31, 2017.

Current assets Current liabilities

Accounts receivable 100,000 Accounts payable 60,000

Inventory 70,000 Overdraft 5,000

Prepayments 10,000 Dividend payable 2,000

Cash & bank 54,000 Tax payable 5,000

Dividends receivable 1,000

If the Inventory includes work in progress $5 and raw materials $10 that have not been adjusted for, What is the appropriate accounting entry for this adjustment?

1. Dr. Raw Material 10, Dr. Work in Process 5 & Cr. Inventory 15
2. Raw Material 5, Dr. Work in Process 10 & Cr. Inventory 15
3. Dr. Raw Material 10 & Cr. Inventory 10
4. Dr. Raw Material 15 & Cr. Inventory 15