Accounting for Job Order Costing
1. Direct Labor
Dr W.I.P. Control Account
Cr Cash Account
2. Accrued Direct Wages
Dr W.I.P. Control Account
Cr Wages Control Account
Indirect Wages
Dr Factory overheads control Account
Cr Wages Control Account
3. Production Overheads
(i) (Not still paid)
Dr Factory overhead control Account
Cr Expenses or Creditor control Account
(ii) (While paid)
Dr Expense or creditors Account
Cr Cash Account
Note
Overheads entries apply while there is an interlocking accounting system.
4. Finished goods transferred to the store:
Dr Finished goods stock control Account
Cr W.I.P Control Account
5. Sale delivery of finished goods to customers:
(i) On Credit: Dr Debtors control Account Cr Sales Account
(ii) In Cash: Dr Bank or Cash Account Cr Sales Account
6. Cost of goods sold to customers:
Dr Cost of sales Account
Cr Finished goods control Account
7. (i) While there is over absorption of production overheads as:
Dr Factory overheads control Account
Cr P & L Account
(ii) While there is under absorption of production overheads as:
Dr P and L Account
Cr Factory overheads control Account
8. When there are non-manufacturing overheads:
Dr P and L Account
Cr Non-manufacturing overheads control Account or nonmanufacturing overheads or else expenses are considered like period costs and are consequently not changed To W.I.P control Account.
Job Cost Account
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|
Dr
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|
Cr
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|
Direct materials issued from stock
|
X
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Materials returned to the store
|
X
|
|
Direct wages
|
X
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Materials transferred to other jobs
|
X
|
|
Production overheads absorbed
|
X
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Cost of completed jobs transferred to finished goods A/c
|
X
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|
Materials transferred from other jobs
|
X
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Balance c/d (Total cost of that job)
|
X
|
|
|
XX
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|
XX
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