JOB ORDER COSTING

INVENTORIES
RECORDED ON MAIN OFFICE BOOKS (FACTORY LEDGER)
Raw Materials, Beginning xx
All functions other than manufacturing are taken cared of by
Add: Net Purchases xx
main office.
Less: Raw Materials, Ending xx
Total Raw Materials Used in the Production xx  Disbursements
 Collections
Direct Materials xx
 Sales
Add: Direct Labor xx
 Expenses
Add: Factory Overheads xx
 Factory Fixed Assets (If specified to the problem)
Total Manufacturing Costs xx
Add: Work in Process, Beginning xx RECORDED ON FACTORY BOOKS (GENERAL LEDGER)
Costs Put into Process xx
Less: Work in Process, Ending xx  Materials
Cost of Goods Manufactured xx  Work in Process
Add: Finished Goods, Beginning xx  Finished Goods
Total Goods Available for Sale  Plant, Property, and Equipment
Less: Finished Goods, Ending xx  Accumulated Depreciation
Cost of Goods Sold xx  Applied Factory Overhead Control
 Factory Overhead Control
Gross Sales xx  Factory Overhead Variance
Less: Sales Returns xx  General Ledger
Less: Sales Discounts xx  Petty Cash Fund
Net Sales xx  Factory Fixed Assets (If the problem is silent)
Less: Cost of Goods Sold xx
Gross Profit xx WORK IN PROCESS ACCOUNT IN GENERAL LEDGER
Less: Selling and Admin Expenses xx
Work in Process
Balance, Beg Finished Goods
Net Profit xx
Direct Materials
Direct Labor
INVENTORIES WITH VARIANCE Factory Overhead Applied

Raw Materials, Beginning xx

Add: Net Purchases xx WORK IN PROCESS ACCOUNT IN FACTORY LEDGER
Less: Raw Materials, Ending xx Job Order No.
Total Raw Materials Used in the Production xx
Direct Materials Costs xx xx
Direct Materials xx Direct Labor Costs xx xx
Add: Direct Labor xx Applied Factory Overhead xx xx
Add: Factory Overheads xx Total Factory Costs xx xx
Total Manufacturing Costs xx
Add: Work in Process, Beginning xx Note:
Costs Put into Process xx
Less: Work in Process, Ending xx  The difference in the overall total of Per General
Cost of Goods Manufactured xx Ledger and Per Cost Sheet is the Factory Overhead
Add: Finished Goods, Beginning xx Applied.
Total Goods Available for Sale  The Costs of Goods Manufactured can be computed
Less: Finished Goods, Ending xx by the jobs who are completed only.
Cost of Goods Sold (Normal) xx
Less (Underapplied) Factory Overhead Variance xx
Add (Overapplied) Factory Overhead Variance xx
Cost of Goods Sold (Actual) xx
 ACCOUNTING FOR MATERIALS Loss from Spoilage Charged to a Particular Job. The
SCRAP MATERIALS production order is a special one because of strict
specifications or difficult processing involved. The overhead
Entry is made only upon sale. The journal entry would credit rate excludes the provision for normal spoilage, and it is the
factory overhead, to income and expense summary, or to estimated cost recovery that is removed from work in
work in process. process.

1. Scrap Sales Treated as Other Income. Original Estimated Cost of

(Work in Cost Normal
Dr. Cash Process)
Cr. Scrap Sales Recovery Goods
Direct Materials xx xx xx
Direct Labor xx xx xx
To close at year-end:
Factory Overhead xx xx xx
Dr. Scrap Sales
Unit Cost xx xx xx
Cr. Income and Expense Summary
With loss from spoilage treated as part of work in process (or
2. Scrap Sales treated as Adjustment to Factory Overhead (if
left with cost of particular job), unit cost of the remaining
not traceable to specific job or process)
goods units minus the unit cost of the original units. \
Dr. Cash
Cr. Factory Overhead DEFECTIVE GOODS

3. Scrap Sales treated as Adjustment of Production Cost of a Reprocessing Cost Treated as Factory Overhead. The
Job or Process defective goods are normal, and the job is a standard or
Dr. Cash regular one. There is an inclusion of sufficient provision for
Cr. Work in Process reprocessing cost of defective work.

Entry is made upon gathering of scrap. Upon Sale, the Original Per Unit
difference between assigned value and selling price is treated (Work in Process)

as an adjustment to a factory overhead or work in process, Direct Materials xx xx

depending on which account was credited when the scrap Direct Labor xx xx
Factory Overhead xx xx
was record. (inclusion of provision)
xx xx
1. Scrap Materials are taken upon gathering them.
Dr. Scrap Materials Reprocessing Cost Charged to a Particular Job. The defective
Cr. Factory Overhead (Work in Process) work is due to the special nature of a job such as when it
requires difficult processing, or the specifications are very
Upon Sale: strict. Factory overhead rate exclude the provision for normal
Dr. Cash imperfection.
Cr. Scrap Materials
Cr. Factory Overhead (Work in Process)
Original Per Unit
(Work in Process)
SPOILED GOODS Direct Materials xx xx
Direct Labor xx xx
Loss from Spoilage Treated as Factory Overhead. The Factory Overhead xx xx
spoilage is normal so it will be charged to production. The (exclusion of provision)
overhead rate includes the provision for normal spoilage and xx xx
the cost of the spoiled unit is removed from work in process.
In charging the reprocessing cost to the job, the difference
Original Cost of Cost of between unit cost (total finished goods divided by number of
(Work in Spoiled Normal
Process)
units) and defective work (reprocessing cost plus reprocessed
Goods Goods applied factory overhead divided by number of units).
Direct Materials xx xx xx
Direct Labor xx xx xx
Factory Overhead xx xx xx
Unit Cost xx xx xx
 PROCESS COSTING
EVEN APPLICATION OF COSTS
QUANTITY SCHEDULE

ONE DEPARTMENT

Quantity Schedule Actual Work Done this Month Equivalent Units of Production

Units to be Accounted For:

Work in Process, Beginning xxx
Placed in Process xxx
Total Units to be Accounted For xxx

Units Accounted for as Follows:

Finished and Transferred

Started Last Month (SLM) xxx Percent Done xxx
Started This Month (STM) xxx 100% xxx
Work in Process, Ending xxx Percent Done xxx
Total Units Accounted For xxx xxx

MULTIPLE DEPARTMENT

DEPARTMENT A DEPARTMENT B
Actual Work Done this Equivalent Units Actual Work Done this Equivalent Units
QUANTITY SCHEDULE Month of Production Month of Production

Units to be Accounted For:

Work in Process, Beginning xxx xxx
Placed in Process xxx
Received from Preceding Department xxx
Total Units to be Accounted For xxx xxx

Units Accounted for as Follows:

Finished and Transferred

Started Last Month (SLM) xxx Percent Done xxx xxx Percent Done xxx
Started This Month (STM) xxx 100% xxx xxx 100% xxx
Work in Process, Ending xxx Percent Done xxx xxx Percent Done xxx
Total Units Accounted For xxx xxx xxx xxx

COST PRODUCTION REPORT

Amount Unit Cost

Costs to be Accounted For:

Factory Costs
Materials xxx Divided by EUP xxx
Labor xxx Divided by EUP xxx
Factory Overhead xxx Divided by EUP xxx
xxx
Work in Process, Beginning xxx
Total Unit Cost xxx
Total Costs to be Accounted For xxx

Costs Accounted for as Follows:

 Transferred to Stockroom
In Process, Beginning, Finished and Transferred
Cost Last Month (CLM) xxx
Cost This Month (CTM) xxx
xxx
Placed in Process, Finished and Transferred xxx
Total Cost Transferred Out xxx
In Process, Ending xxx
Total Units Accounted For xxx
 2. Share Premium. If mas mataas value ng par natin,
ang sobra ay mapupunta sa share premium. It is
additional paid in capital (APIC).

Sources of Share Premium:

a. Excess over par value. Nagissue tayo ng shares at

above par.
b. Resale of treasury Shares. Nagbenta tayo more than
cost.
c. Donated capital. Yung mga shareholders ay ayaw na
SHAREHOLDER’S EQUITY
nila ng mga shares, dinodonate nila sa atin pabalik.
d. Issuance of share warrants. Nagiisue kapag yung
- Equity or capital of a corporation. It is the owner’s
mga investors natin magkaroon ng chance makabili
claims against the corporation.
ng shares natin.
- It is residual balance. This is the assets of corporation
e. Issuance of convertible bonds payable. Meron
minus its liabilities.
tayong equity component, which is share premium
COMPONENTS OF SHAREHOLDER’S EQUITY conversion privilege, if nagissue tayo neto.
CONTRIBUTED CAPITAL f. Distribution of small stock dividends. Kapag
nagissue tayo neto, ang measurement ay at fair
Capital contributed by the owners or the shareholders of value unless par is higher than fair value, edi
corporation. magpapar tayo.
g. Quasi-reorganization and recapitalization.
1. Share Capital (Issued). Always at par or if no par, 3. Subscribed Share Capital (Unissued). It is unissued
stated value. Hindi pwedeng lumagpas sa par value because according to the Revised Corporation Code
yung capital natin. of the Philippines, it is illegal to issue shares until it is
fully paid. Kasama siya sa contributed capital kase
Accounting for Share Capital possible na may partial payment na.

MEMORANDUM ENTRY METHOD JOURNAL ENTRY METHOD

Authorized Capitalization
Subscription Receivable. The remaining balance or
Dr. Unissued Share Capital unpaid balance of the subscribed share capital. If we
Cr. Authorized Share Capital are expecting this receivable to receive with 12
Subscription
months or less, magiging part siya ng current assets.
Dr. Cash Dr. Cash
Dr. Subscription Receivable Dr. Subscription Receivable If beyond 1 year, magiging part siya ng contra equity
Cr. Subscription Share Capital Cr. Subscription Share Capital account. When we say contra account – dinededuct
Collection of Subscription Receivable and Issuance of Shares
sa specific account. Dahil contra equity account,
Dr. Cash Dr. Cash
Cr. Subscription Receivable Cr. Subscription Receivable imiminus natin siya sa equity account. Kapag silent
Dr. Subscription Share Capital Dr. Subscribed Share Capital ang problem, we assume that contra-equity account
Cr. Share Capital Cr. Unissued Share Capital siya.
Cash Subscription
Dr. Cash Dr. Cash CASH SUBSCRIPTION NONCASH SUBSCRIPTIONS
Cr. Share Capital Cr. Share Capital (SILENT)
Dr. Cash Dr. Subscription Receivable
Cr. Share Capital Cr. Subscribed Capital
Cr. Share Premium Cr. Share Premium
a. Ordinary Shares (Voting Rights) – kahit tira tira lang
yung napupunta sa ordinary shares, kung napakalaki
naman ng natira, ay sa kanila lahat mapupunta yon.
b. Preference Shares (Preferred) – para lang silang
OTHER COMPREHENSIVE INCOME
investors. Sila yung paborito, palaging inuuna over
ordinary shares. Kapag may declaration of dividends,
ang mauuna mabigyan ay yung mga may preference
shares. Dito, walang voting rights and fixed lang yun
return. Kahit sila yung inuuna, limited lang yung
narereceive nila.
1. Retained Earnings
2. Treasury Shares (Deduction – Contra Equity Account)