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Production Double Entries

1. The document describes an integrated accounting system for recording material, labor, overhead and finished goods transactions between a factory's cost ledger and a head office's general ledger. 2. Transactions include purchases and issues of materials, recording and payment of payroll, tracking of actual and applied overheads, and manufacturing and sales of finished goods. 3. Entries are made in both ledgers to interlock the systems with debit and credit adjustments between ledgers to reconcile differences.

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Waseim khan Barik zai
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90 views8 pages

Production Double Entries

1. The document describes an integrated accounting system for recording material, labor, overhead and finished goods transactions between a factory's cost ledger and a head office's general ledger. 2. Transactions include purchases and issues of materials, recording and payment of payroll, tracking of actual and applied overheads, and manufacturing and sales of finished goods. 3. Entries are made in both ledgers to interlock the systems with debit and credit adjustments between ledgers to reconcile differences.

Uploaded by

Waseim khan Barik zai
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Integrated System

Material
Dr. RM Inventory
Purchase of material
1 Cr. Cash / Creditor
Dr. Cash / Creditor
Purchase of return to supplier
2 Cr. RM Inventory
Dr. WIP Inventory (Direct Material)
Issue to production Dr. FOH Control (Indirect Material)
3 Cr. RM Inventory
Dr. RM Inventory
Return from production Cr. WIP Inventory (Direct Material)
4 Cr. FOH Control (Indirect Material)
Dr. P & L (Abnormal Loss)
Material loss in store Dr. FOH Control (Normal Loss)
5 Cr. RM Inventory

Labor
Dr. Wage control
Cr. Payable to Employees
Recording Payroll
Cr. WHT Payable
6 Cr. Advance to Employee
Dr. WIP Inventory (Direct Labourl)
Charging Wages to Production Dr. FOH Control (Indirect Labour)
7 Cr. Wages Control
Dr. Payable to Employees
Payment of Payroll Dr. WHT Payable
8 Cr. Bank/Cash

Overheads
Dr. FOH control
Actual Overheads Incurred
9 Cr. Cash / Accumulated Depreciation
Dr. WIP Inventory
FOH Applied to Production
10 Cr. FOH Control
Under Applied
Dr. Cost of Sales
Cr. FOH Control
Under / Over Applied FOH
Over Applied
Dr. FOH Control
11 Cr. Cost of Sales

Finish Goods
Dr. FG Inventory
Goods Manufactured
12 Cr. WIP Inventory
Dr. Cash / Debtor
Cr. Sales
Goods Sold
Dr. Cost of Sales
13 Cr. FG Inventory
Interlocking System

Head Office Books (GL) Factory Books


Material
Dr. FL Control Dr. RM Inventory
Purchase of material
1 Cr. Cash / Creditor Cr. GL Control
Dr. Cash / Creditor Dr. GL Control
Purchase of return to supplier
2 Cr. FL Control Cr. RM Inventory
Dr. WIP Inventory (Direct Material)
Issue to production Dr. FOH Control (Indirect Material)
3 Cr. RM Inventory
Dr. RM Inventory
Return from production Cr. WIP Inventory (Direct Material)
4 Cr. FOH Control (Indirect Material)
Dr. P & L (Abnormal Loss) Dr. GL Control (Abnormal Loss)
Material loss in store Cr. FL Control Dr. FOH Control (Normal Loss)
5 Cr. RM Inventory
Labor
Dr. FL Control
Cr. Payable to Employees Dr. Wage Control
Recording Payroll
Cr. WHT Payable Cr. GL Control
6 Cr. Advance to Employee
Dr. WIP Inventory (Direct Labourl)
Charging Wages to Production Dr. FOH Control (Indirect Labour)
7 Cr. Wages Control
Dr. Payable to Employees
Payment of Payroll Dr. WHT Payable
8 Cr. Bank

Overheads
Dr. FL Control Dr. FOH control
Actual Overheads Incurred
9 Cr. Cash / Accumulated Dep Cr. GL Control
Dr. WIP Inventory
FOH Applied to Production
10 Cr. FOH Control
Under Applied Under Applied
Dr. Cost of Sales Dr. GL Control
Cr. FL Control Cr. FOH Control
Under / Over Applied FOH
Over Applied Over Applied
Dr. FL Control Dr. FOH Control
11 Cr. Cost of Sales Cr. GL Control

Finish Goods
Dr. FG Inventory
Goods Manufactured
12 Cr. WIP Inventory
Dr. Cash / Debtor
Cr. Sales
Goods Sold
Dr. Cost of Sales Dr. GL Control
13 Cr. FL Controls Cr. FG Inventory
_
Fully Interlocking System

Factory Books (Cost Ledger)


Material
Dr. RM Inventory
Purchase of material
1 Cr. GL Adjustment
Dr. GL Adjustment
Purchase of return to supplier
2 Cr. RM Inventory
Dr. WIP Inventory (Direct Material)
Issue to production Dr. FOH Control (Indirect Material)
3 Cr. RM Inventory
Dr. RM Inventory
Return from production Cr. WIP Inventory (Direct Material)
4 Cr. FOH Control (Indirect Material)
Dr. Costing P & L (Abnormal Loss)
Material loss in store Dr. FOH Control (Normal Loss)
5 Cr. RM Inventory

Labor

Dr. Wage control


Recording Payroll
Cr. GL Adjustment
6
Dr. WIP Inventory (Direct Labourl)
Charging Wages to Production Dr. FOH Control (Indirect Labour)
7 Cr. Wages Control

Overheads
Dr. FOH control
Actual Overheads Incurred
9 Cr. GL Adjustment
Dr. WIP Inventory
FOH Applied to Production
10 Cr. FOH Control
Dr. FOH control
Notional Rent Recorded
11 Cr. Notional Rent

Admin & selling Over heads


Dr. Admin & Selling OH
Actual Admin & selling OH
12 Cr. GL Adjustment
Dr. Costing P & L
Admin & selling OH Applied
13 Cr. Admin & Selling OH
Goods
Dr. FG Inventory
Goods Manufactured
12 Cr. WIP Inventory
Dr. GL Adjustment
Cr. Sales
Goods Sold
Dr. Cost of Sales
13 Cr. FG Inventory

Closing Entries for costing P&L


Under Applied
Dr. Cost of Sales
Cr. FOH Control
14 Under / Over Applied FOH
Over Applied
Dr. FOH Control
Cr. Cost of Sales
Dr. Notional Rent
15 Notional Rent Closed at P&L
Cr. Costing P&L
Under Applied
Dr. Costing P&L
Cr. Admin & selling OH Control
Under / Over FOH Applied Admin & Selling OH
Over Applied
Dr. Admin & Selling OH Control
16 Cr. Costing P&L
Dr. Sales
Transfer of Sales
17 Cr. Costing P&L
Dr. Costing P&L
Transfer of Cost of Sales
18 Cr. Cost of Sales
Dr. Costing P&L
Net profit
19 Cr. GL Adjustment
Reconciliation between costing profit and accounting profit

Rs.
Costing Profit x
Less: HO Specific Expenses (x)
Add: HO Specific Incomes x
Add: Costing Deprication x
Less: Accounting Deprication (x)
Add: Costing Opening Accounts (stocks) x
Less: Costing closing Account (stocks) (x)
Less: Accounting Opening Accounts (stocks) (x)
Add: Accounting closing Account (stocks) x
Add: Notional Rent x
Add: Over Applied FOH / Admin OH x
Less: Under Applied FOH / Admin OH (x)
Accounting Profit xx
Notes
Includes * Notional Rent and Over / Under Applied Only if their above
adjustment entries have not been passed ( if they are not part of Costing p
&L

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