Summary of Entries For Defective Goods

LOSS CHARGED TO JOB: LOSS CHARGED TO ALL PRODUCTIO

1) When work is started SAME As that of Job
W-I-P A/C
Material A/C
Payroll A/C
FOH applied A/C

(Being cost of work started)

2) When units become defected and
rework is done:
FOH A/C
W-I-P A/C
Material A/C Material A/C
Payroll A/C Payroll A/C
FOH applied A/C
(Being cost of rework) FOH applied A/C
(Being cost of rework)

3) For completion of goods: SAME

Finished goods A/C
W-I-P A/C
(Being cost of work completed)

Summary of Entries For Spoiled Goods

LOSS CHARGED TO JOB: LOSS CHARGED TO ALL PRODUCTIO
1) When work is started SAME As that of Job
W-I-P A/C
Material A/C
Payroll A/C
FOH applied A/C

(Being cost of work started)

 2) When units become spoiled: Spoiled work A/C (sale price)
Spoiled work A/C (sale price)
FOH A/C (actual loss)
W-I-P A/C
(Being cost of spoiled work) W-I-P A/C (total loss)
(Being cost of spoiled work)

3) For completion of goods: SAME

Finished goods A/C
W-I-P A/C
(Being cost of work completed)

4) For sale of spoiled work: SAME

Cash A/C
Spoiled work A/C
(Being sale of spoiled work)

Practice Question No 13,14,15 page 189-190

Practice Problems 7-7 and 7-8 page 193,194

E-13

LOSS CHARGED TO JOB: LOSS CHARGED TO ALL PRODUCTIO

W-I-P A/C 60000 W-I-P A/C 60900
Material A/C 24000 Material A/C 24000
Payroll A/C 18000 Payroll A/C 18000
Applied FOH A/C 18000 Applied FOH A/C 18900
(Being cost of work put into process) (Being cost of work put into process)

1) When units become spoiled: (500×5) Spoiled work A/C 2500

Spoiled work A/C 2500
FOH control A/C 2575
W-I-P A/C 2500
(Being cost of spoiled work) (500×10.15) W-I-P A/C* 5075
(Being cost of spoiled work)

2) For completion of goods: Finished goods A/C 55825

Finished goods A/C 57500
W-I-P A/C 55825
W-I-P A/C 57500
(Being cost of work completed) (Being cost of work completed)

3) For sale of spoiled work: SAME

Cash A/C 2500
Cash A/C 2500
Spoiled work A/C 2500
(Being sale of spoiled work) Spoiled work A/C 2500
(Being sale of spoiled work)

WIP A/c *Total cost of loss = 60900 / 6000 × 500

= $ 5075
Per Unit Cost in Case 2: 55825/5500=10.15(always remains same when charged to Production)
Per Unit Cost in Case 1: 57500/5500= 10.45 (always increases when cost is charged to job)
Problem 7-8

LOSS CHARGED TO JOB: LOSS CHARGED TO ALL PRODUCTIO

W-I-P A/C 8375 W-I-P A/C 8550
(1000×4) Material A/C 4000 (1000×4) Material A/C 4000
(1000×1.75) Payroll A/C 1750 (1000×1.75) Payroll A/C 1750
(1750×150%)FOH applied A/C 2625 (1750×160%)FOH applied A/C 2800
(Being cost of work put into process) (Being cost of work put into process)

W-I-P A/C 71.25 FOH 73.5

(75×0.20 ) Material A/C 15 (75×0.2 Material A/C 15
(75×0.30) Payroll A/C 22.5 (75×0.30) Payroll A/C 22.5
(22.5×150%)FOH applied A/C 33.75 (22.5×160%)FOH applied A/C 36
(Being cost of work put into process) Being cost of work put into process)

Finished goods A/C 8446.25 Finished goods A/C 8550

W-I-P A/C 8446.25 W-I-P A/C 8550
(Being cost of work completed) (Being cost of work completed)

Per Unit Cost= 8550/1000=8.55

Per Unit Cost= 8446.25/1000=8.44
 LOWER OF COST OR MARKET
Items Original Replacement Floor Ceiling Market Lower of
cost cost market
or cost
$ $ $ $ $ $
Given Given Given Self Self Self Self
calculation calculation
Floor = Sale price - cost of completion and sale - Normal profit
Ceiling= Sale price -cost of completion and sale
Market= Replacement price within the range of Floor and ceiling (select the middle
value)