CHAPTER 3

JOB-ORDER COSTING: COST

FLOWS AND EXTERNAL
REPORTING
T-ACCOUNTS TO SHOW THE FLOW OF COSTS IN A JOB-ORDER COSTING SYSTEM
T-ACCOUNTS TO SHOW THE FLOW OF COSTS IN A JOB-ORDER COSTING SYSTEM
T-ACCOUNTS TO SHOW THE FLOW OF COSTS IN A JOB-ORDER COSTING SYSTEM

As of March 31st, Job A had been assigned $30,000 in manufacturing costs, which corresponds with Ruger’s
Work in Process balance on April 1st of $30,000.

Work in Process

Bal. 30,000
T-ACCOUNTS TO SHOW THE FLOW OF COSTS IN A JOB-ORDER COSTING SYSTEM

On April 1, Ruger Corporation had $7,000 in raw materials on hand

Raw Materials

Bal. 7,000
T-ACCOUNTS TO SHOW THE FLOW OF COSTS IN A JOB-ORDER COSTING SYSTEM

(1) Raw materials purchased.

Raw Materials Accounts Payable

Bal. 7000 Bal. XX
(1) 60,000 (1) 60,000
T-ACCOUNTS TO SHOW THE FLOW OF COSTS IN A JOB-ORDER COSTING SYSTEM

(2) Direct and indirect materials issued to production.

Raw Materials Work in Process

Bal. 7000 (2) 52,000 Bal. 30,000
(1) 60,000 (2) 50,000

Manufacturing Overhead

(2) 2,000
T-ACCOUNTS TO SHOW THE FLOW OF COSTS IN A JOB-ORDER COSTING SYSTEM
(3) Direct and indirect factory labor cost incurred.

Salaries and Wages Payable

Bal. XX
(3) 75,000 Work in Process
Bal. 30,000
(2) 50,000
(3) 60,000
Manufacturing Overhead
(2) 2,000
(3) 15,000
(4) Utilities and other factory costs incurred.

Manufacturing Overhead
Accounts Payable
(2) 2,000
Bal. XX (3) 15,000
(1) 60,000 (4) 40,000
(4) 40,000
(5) Property taxes and insurance incurred on the factory

Prepaid Insurance
Property Taxes Payable
Bal XX
Bal. XX
(5) 7,000
(5) 13,000

Manufacturing Overhead
(2) 2,000
(3) 15,000
(4) 40,000
(5) 20,000
(6) Depreciation recorded on factory assets.

Manufacturing Overhead Accumulated Depreciation

Bal XX
(2) 2,000 (6) 18,000
(3) 15,000
(4) 40,000
(5) 20,000
(6) 18,000
(7) Overhead cost applied to Work in Process. ($6 per machine hours * 15,000 machine hours)

Work in Process Manufacturing Overhead

Bal. 30,000 (2) 2,000 (7) 90,000

(3) 15,000
(2) 50,000
(4) 40,000
(3) 60,000
(7) 90,000 (5) 20,000
(6) 18,000
(8) Administrative salaries expense incurred.

Salaries Expense Salaries and Wages payable

(8) 30,000 Bal. XX

(3) 75,000
(8) 30,000
(9) Depreciation recorded on office equipment.

Depreciation Expense Accumulated Depreciation

(9) 7,000 Bal. XX

(6) 18,000
(9) 7,000
(10) Advertising and other selling and administrative expense incurred.
Other Selling and
Advertising Expense Administrative Expense
(10) 8,000
(10) 42,000

Accounts Payable
Bal. XX
(1) 60,000 (4)
40,000
(10) 50,000
(11) Cost of goods manufactured transferred to finished goods.

Finished Goods Work in Process

Bal. 30,000 (11) 115,800
Bal. 0
(2) 50,000 (3)
(11) 115,800 60,000
(7) 90,000
(12) Sale of Job A recorded.

Accounts Receivable Sales

(12) 225,000
Bal. XX
(12) 225,000
(13) Cost of goods sold recorded for Job A. (750 units * $158 per unit)

Cost of Goods Sold Finished Goods

Bal. 0 (13) 118,500
(13) 118,500
(11) 158,000
Bal.
Raw Materials Work in Process
Bal. 7,000 (2) 52,000 Bal. 30,000 (11) 158,000
(1) 60,000 (2) 50,000 (3)
Bal 15,000 60,000 (7)
90,000
Bal. 72,000

Manufacturing Overhead
Finished Goods
Bal. 0 (13) (2) 2,000 (7) 90,000
118,500
(3) 15,000
(11) 158,000
(4) 40,000
Bal. 39,500 (5) 20,000
(6) 18,000

95,000 90,000
Bal. 5,000