journal entries in Manufacturing

NON-INTEGRATED ACCOUNTS

Scheme of journal entries:-

Material:

a) For material purchases (cash or credit)
i) Material control a/c Dr
To Cost ledger control a/c

ii) Stores ledger control a/c Dr
To Material control a/c

b) Purchases for a special job
Work-in-progress ledger control a/c Dr
To Cost ledger control a/c

c) Material returned to vender
Cost ledger control a/c Dr
To Stores ledger control a/c

d) Material (direct) issued to production
Work-in-progress control a/c Dr
To Stores ledger control a/c

e) Material (indirect) issued to production
Manufacturing overheads a/c Dr
To Stores ledger control a/c

f) Material returned from shop to stores
Stores ledger control a/c Dr
To Work-in-progress control a/c

g) Material transferred from Job 1 to Job 2
Job 2 a/c Dr
To Job 1 a/c

i) Material issued from stores for repairs
Manufacturing overhead a/c Dr
To Stores ledger control a/c



Labour:

a) Direct wages paid
i) Wage control a/c Dr
To Cost ledger control a/c

ii) Work-in-progress a/c Dr
To Wage control a/c

b) Indirect wages paid to workers in Production,
Administration, Selling and Distribution departments
i) Wage control a/c Dr
To Cost ledger control a/c

ii) Production Overhead a/c Dr
Administrative Overhead a/c Dr
Selling & Distribution Overhead a/c Dr
To Wage control a/c

c) Direct Expenses on a particular job
Job a/c Dr
To Cost ledger control a/c

Overheads:-

a) Overhead expenses incurred
Production overhead a/c Dr
Administrative Overhead a/c Dr
Selling & Distribution Overhead a/c Dr
To cost ledger control a/c

b) Carriage inward
Manufacturing Overhead a/c Dr
To Cost ledger control a/c

c) Production Overheads recovered
Work-in-progress control a/c Dr
To Production Overhead a/c

d) Administrative Overhead recovered from finished goods
Finished goods ledger control a/c Dr
To Administrative Overhead a/c

e) Selling and Distribution Overhead recovered from sales
Cost of sales a/c Dr
To Selling & Distribution a/c

f) If over/under absorbed amounts are carried forward to subsequent year, the
balance of each Overhead account will have to be transferred to respective
Overhead suspense (or reserve) Accounts as follows:

i) For over recovery : Production Overhead a/c Dr
To Production overhead suspense a/c

ii) For under recovery : Administrative Overhead Suspense a/c Dr
To Administrative Overhead a/c

Selling & Distribution Overhead Suspense a/c Dr
To Selling & Distribution Overhead a/c

g) In case the Under/Over absorbed overheads are transferred to costing profit & loss
a/c then the relevant entries are:
i) For Over recovery: Production Overhead a/c Dr
To Costing Profit & Loss a/c

ii) For Under recovery: Costing Profit & Loss a/c Dr
To Administration Overhead a/c

Sales:-

For sales effected: Cost ledger control a/c Dr
To Costing Profit & Loss a/c

Profit / Loss:

a) In case of profit the entry is as follows
Costing Profit & Loss a/c Dr
To Cost ledger control a/c

b) Reverse the entry in case of loss


The main accounts which are usually prepared when a separate cost ledger is maintained is as follows:-

i) Cost ledger control a/c
ii) Stores ledger control a/c
iii) Work-in-progress control a/c
iv) Finished goods control a/c
v) Wage control a/c
vi) Manufacturing/Production/Works Overheads a/c
vii) Administrative Overhead a/c
Viii) Selling & Distribution Overhead a/c
ix) Cost of sales a/c
x) Costing profit & loss a/c

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