Page 738 - Accounting Principles (A Business Perspective)

18. Managerial accounting concepts/job costing

Materials Inventory Work in Process Finished Goods Inventory
Inventory Job No.
- 106
Beginning 20,000 Beginning Beginning 5,500 Sold (6) 5,500
inventory 25,000 (2) 24,000 inventory: inventory
(1) Materials 4,200
Ending 21,000 Labor 5,000 Completed
inventory Overhead 4,000 (5) 29,400
Total 13,200
Current Completed (5) 29,400 Ending 29,400
period: (2) 9,000 inventory
Mats. (3) 4,000
Labor (4) 3,200
Ovrhd. 16,200
Total
Payroll Summary Ending Cost of Sold
inventory -0- goods
Incurred 25,000 Distributed (3) 25,000 Sold (6) 5,500
Overhead
Indirect Applied to
materials (2) 1,000 production (4) 16,000
Indirect (3) 5,000
labor
Other Work in Process
overhead (7) 9,800 Inventory Job No.
- 107
Overapplied200 Beginning
balance inventory -0-
Current
period: (2) 14,000
Mats. (3) 16,000
Labor (4) 12,800
Ovrhd. 42,800
Total
Ending
inventory:
Materials 14,000
Labor 16,000
Overhead 12,800
Total 42,800
Note: Numbers in parentheses refer to journal entries in the text. We show only the entries or parts of entries that deal with cost flows.
Exhibit 145: Job cost flows-Creative Printers
• During July, Creative Printers purchased USD 25,000 of materials on account. This purchase included both

direct materials, such as paper, and indirect materials, such as printing supplies and computer supplies.
Materials inventory 25,000
Accounts payable 25,000
To record purchase of
materials.
• During July, Creative Printers sent direct materials from the materials storeroom to jobs as follows: USD
9,000 to Job No. 106, and USD 14,000 to Job No. 107. The company also sent indirect materials of USD 1,000
to jobs. It charged indirect materials to overhead, not to each job, because the company does not keep track of

how much indirect materials it uses on each job. (Manufacturing companies often use Manufacturing
Overhead for the Overhead account. We generally use the Overhead account for both manufacturing and non-
manufacturing companies in this chapter.) Each job has a separate Work in Process Inventory account to keep
track of the particular job's costs.
Work in process inventory – Job No. 106 (+A) 9,000
Work in process inventory – Job No. 107 (+A) 14,000
Overhead (or manufacturing overhead) (-SE) 1,000
Materials inventory (-A) 24,000
To record direct and indirect materials sent

739