Phase 1> Accumulation of the three manufacturing cost elements:

Purchase raw materials Incur factory labour Incur manufacturing overhead

Account Debit Credit Account Debit Credit
Account Debit Credit
Factory labour XXX Manufacturing
Raw materials
XXX Overhead XXX
inventory Factory wages
payable XXX Accounts payable XXX
Accounts Utilities payable XXX
XXX
payable Accumulated depreciation XXX

Phase 2> Assignment of the three manufacturing cost elements to Work in

Process:

Materials used Factory labour used Allocate overhead

Account Debit Credit Account Debit Credit Account Debit Credit
Work in Process Work in Process Work in Process
- Dept 1 XXX - Dept 1 XXX - Dept 1 XXX
Work in Process Work in Process Work in Process
- Dept 2 XXX - Dept 2 XXX - Dept 2 XXX

Factory labour XXX Manufacturing overhead XXX

Raw materials inventory XXX

Phases 3> Transferring work in process to the next department

Account Debit Credit
Work in Process- Dept 2 XXX
Work in Process- Dept 1 XXX

Phases 4> Transferring work in process to finished goods inventory

Account Debit Credit
Finished goods inventory XXX
Work in Process- Dept 2 XXX

Phases 5>Transferring finished goods to cost of goods sold

Account Debit Credit
Cost of Goods Sold XXX
Finished Goods Inventory XXX