3.4 Journal Entries For the Flow of Production Costs

The journal entries for the flow of production costs are the same with process and job costing.  The cost flow is as follows:

job cost flowchart The corresponding journal entries to the letters in the flow chart are:

Journal Entries by account flow (see referenced letter)
Ref Account / Description Debit Credit
a Raw Materials Inventory X
   Cash or Accounts Payable X
  Purchased raw materials inventory
b Factory Payroll X
     Wages Payable X
  Record wages earned but unpaid
c These are examples of some of the entries you may record:
  Manufacturing Overhead X
     Accumulated Depreciation X
  Record depreciation on factory equipment
  Manufacturing Overhead X
     Cash X
  Record factory rent paid with cash
  Manufacturing Overhead X
     Accounts Payable X
  Record factory supplies purchased on credit
d Work in Process Inventory X
     Raw Materials Inventory X
  Record Direct Materials Used
e Manufacturing Overhead X
     Raw Materials Inventory X
  Record INDIRECT materials used
f Work in Process Inventory X
     Factory Payroll X
  Record Direct Labor
g Manufacturing Overhead X
     Factory Payroll X
  Record INDIRECT labor
h Work in Process Inventory X
     Manufacturing Overhead X
  Record Overhead APPLIED to production
i Finished Goods Inventory X
     Work in Process Inventory X
  Record jobs or goods completed (cost of goods manufactured)
j Cost of goods sold X
     Finished Goods Inventory X
  Record cost of jobs or goods completed AND sold
For a printable view click job cost flow.

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