{"id":162,"date":"2021-01-26T22:17:30","date_gmt":"2021-01-26T22:17:30","guid":{"rendered":"https:\/\/courses.lumenlearning.com\/wm-managerialaccounting\/?post_type=chapter&#038;p=162"},"modified":"2021-08-03T02:06:55","modified_gmt":"2021-08-03T02:06:55","slug":"accounting-for-completed-jobs","status":"publish","type":"chapter","link":"https:\/\/courses.lumenlearning.com\/wm-managerialaccounting\/chapter\/accounting-for-completed-jobs\/","title":{"raw":"Accounting for Completed Jobs","rendered":"Accounting for Completed Jobs"},"content":{"raw":"<div class=\"textbox learning-objectives\">\r\n<h3>Learning Outcomes<\/h3>\r\n<ul>\r\n \t<li>Record completion and sales of finished goods<\/li>\r\n<\/ul>\r\n<\/div>\r\n<h2>Completion of a Job<\/h2>\r\nAt the end of the month, Jackie sorts the job cards into two piles: jobs still in process (sitting on the workbench) and completed jobs. Job 1 was completed and shipped, and Job 2 is done but sitting in the warehouse waiting to be sold. She now has to update her accounting records to record the movement of the jobs from work in process to finished goods.\r\n\r\n<img class=\"aligncenter wp-image-1400 size-large\" src=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images\/wp-content\/uploads\/sites\/5469\/2021\/01\/06220737\/Screen-Shot-2021-05-06-at-2.33.01-PM-1024x493.png\" alt=\"Two horizontal flowcharts are shown. The first flow chart is labeled \u201cPhysical flow of inventory\u201d. It shows four boxes, from left to right, Materials storeroom, Production departments, Finished goods storeroom, and Delivered to customers. The second flowchart is labeled \u201cJob costing\u201d. It shows four boxes, from left to right, Raw Materials inventory, Work in Process inventory, Finished Goods inventory, and Cost of Goods Sold. Below Work in Process inventory, there are two additional boxes pointing to it, Direct labor and Manufacturing overhead. Two boxes are highlighted--Finished Goods inventory and Cost of Goods Sold.\" width=\"1024\" height=\"493\" \/>\r\n<div align=\"left\">\r\n<div align=\"left\">\r\n<table class=\"fin-table acctstatement fw\">\r\n<tbody>\r\n<tr>\r\n<th scope=\"col\">Job Sheet - WIP<\/th>\r\n<th class=\"r\" scope=\"col\">Job 1<\/th>\r\n<th class=\"r\" scope=\"col\">Job 2<\/th>\r\n<th class=\"r\" scope=\"col\">Job 3<\/th>\r\n<th class=\"r\" scope=\"col\">Total WIP<\/th>\r\n<\/tr>\r\n<\/tbody>\r\n<tbody>\r\n<tr>\r\n<td colspan=\"5\"><span class=\"u-sr-only\">Subcategory, <\/span><strong>Direct Materials<\/strong><\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Wood<\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td class=\"r\">100<\/td>\r\n<td class=\"r\">100<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Wheels\/trucks<\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td class=\"r\">0<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Direct Labor<\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td class=\"r\">0<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Overhead allocation<\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td class=\"r\">0<\/td>\r\n<td class=\"r\">0<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Total Job Cost<\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>0<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>0<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>100<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>100<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<\/tr>\r\n<tr>\r\n<td><\/td>\r\n<td class=\"r\">completed<\/td>\r\n<td class=\"r\">completed<\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\n<\/div>\r\n<\/div>\r\n&nbsp;\r\n<div align=\"left\">\r\n<table class=\"fin-table acctstatement fw\">\r\n<tbody>\r\n<tr>\r\n<th scope=\"col\">Job Sheet - Finished Goods<\/th>\r\n<th class=\"r\" scope=\"col\">Job 1<\/th>\r\n<th class=\"r\" scope=\"col\">Job 2<\/th>\r\n<th class=\"r\" scope=\"col\">Job 3<\/th>\r\n<th class=\"r\" scope=\"col\">Total FG<\/th>\r\n<\/tr>\r\n<\/tbody>\r\n<tbody>\r\n<tr>\r\n<td colspan=\"5\"><span class=\"u-sr-only\">Subcategory, <\/span><strong>Direct Materials<\/strong><\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Wood<\/td>\r\n<td class=\"r\">100<\/td>\r\n<td class=\"r\">100<\/td>\r\n<td><\/td>\r\n<td class=\"r\">200<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Wheels\/trucks<\/td>\r\n<td class=\"r\">50<\/td>\r\n<td class=\"r\">100<\/td>\r\n<td><\/td>\r\n<td class=\"r\">150<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Direct Labor<\/td>\r\n<td class=\"r\">400<\/td>\r\n<td class=\"r\">600<\/td>\r\n<td><\/td>\r\n<td class=\"r\">1000<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Overhead allocation<\/td>\r\n<td class=\"r\">1200<\/td>\r\n<td class=\"r\">1800<\/td>\r\n<td><\/td>\r\n<td class=\"r\">3000<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Total Job Cost<\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>1750<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>2600<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>0<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>4350<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<\/tr>\r\n<tr>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\n<\/div>\r\nCosts of completed jobs that are moved physically to the finished goods area of the factory also have to be moved in the accounting records from Work in Process to Finished Goods.\r\n<div align=\"left\">\r\n<table class=\"fin-table gridded\">\r\n<thead>\r\n<tr>\r\n<th scope=\"col\">Date<\/th>\r\n<th scope=\"col\">Account\/Explanation<\/th>\r\n<th scope=\"col\">Debit<\/th>\r\n<th scope=\"col\">Credit<\/th>\r\n<\/tr>\r\n<\/thead>\r\n<tbody>\r\n<tr>\r\n<th scope=\"row\">Jul 31<\/th>\r\n<td class=\"highlight\">Finished Goods Inventory<\/td>\r\n<td class=\"r highlight\">\u00a0 \u00a0 \u00a0 \u00a0 4,350<\/td>\r\n<td class=\"highlight\"><\/td>\r\n<\/tr>\r\n<tr>\r\n<td><\/td>\r\n<td class=\"highlight\">\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Work in Process<\/td>\r\n<td class=\"highlight\"><\/td>\r\n<td class=\"r highlight\">\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 4,350<\/td>\r\n<\/tr>\r\n<tr>\r\n<td><\/td>\r\n<td><em>To move Jobs 1 and 2 to Finished Goods<\/em><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\n&nbsp;\r\n\r\n<\/div>\r\n<img class=\"aligncenter\" src=\"https:\/\/lh5.googleusercontent.com\/sOea1eFr8obGCO9ij40TPr_byDosh6lWCx4CnPDi6nAEZsh-fm3s5F83EuQLZEtDhIcKcxzLjZmn8sczK7yBJXhAk9DLPl5ySR9EC64mqsn353uxW_F86ESzVpyMRN74lFwDhGFf\" alt=\"A journal entry dated July 31 shows a debit of $4,350 to Finished Goods Inventory and a credit of $4,350 to Work in Process with the note \u201cTo move Jobs 1 and 2 to Finished Goods\u201d. Each line item in the journal entry points to the corresponding debit or credit on its respective t-account.\" width=\"1087\" height=\"767\" \/>\r\n\r\nPosting this entry to WIP leaves a balance in that account of $100, which comports to reality. If an auditor walked into the shop at the end of the day on July 31, she would see two units of wood on the workbench, which equates to a cost of $100. Looking at the job card, she would see that no labor had been applied (and that would probably be obvious just looking at the untouched wood as well). It is imperative that the accounting records reflect physical reality.\r\n\r\n<img class=\"aligncenter wp-image-1163 size-full\" src=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images\/wp-content\/uploads\/sites\/5469\/2021\/01\/29202559\/5.3.1a.png\" alt=\"A t-account for Work in Process shows a debit of $100 beginning balance, debits of $450, $100, $700, $100, and $3000, a credit of $4,350 dated for July 31, and a debit of $100 ending balance.\" width=\"369\" height=\"355\" \/>\r\n\r\n&nbsp;\r\n<h2>Recording Cost of Goods Sold<\/h2>\r\nObserving the Finished Goods inventory account, we see in the accounting records that both Job 1 and Job 2 are listed in the ledger, but in reality, Job 1 is gone and out the door while only Job 2 remains. Therefore, Job 1 is determined to be Cost of Goods Sold, and Jackie needs to make a journal entry to reflect that.\r\n<div align=\"left\">\r\n<table class=\"fin-table acctstatement fw\">\r\n<tbody>\r\n<tr>\r\n<th scope=\"col\">Job Sheet - WIP<\/th>\r\n<th class=\"r\" scope=\"col\">Job 1<\/th>\r\n<th class=\"r\" scope=\"col\">Job 2<\/th>\r\n<th class=\"r\" scope=\"col\">Job 3<\/th>\r\n<th class=\"r\" scope=\"col\">Total WIP<\/th>\r\n<\/tr>\r\n<\/tbody>\r\n<tbody>\r\n<tr>\r\n<td colspan=\"5\"><span class=\"u-sr-only\">Subcategory, <\/span><strong>Direct Materials<\/strong><\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Wood<\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td class=\"r\">100<\/td>\r\n<td class=\"r\">100<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Wheels\/trucks<\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td class=\"r\">0<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Direct Labor<\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td class=\"r\">0<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Overhead allocation<\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td class=\"r\">0<\/td>\r\n<td class=\"r\">0<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Total Job Cost<\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>0<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>0<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>100<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>100<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<\/tr>\r\n<tr>\r\n<td><\/td>\r\n<td class=\"r\">completed<\/td>\r\n<td class=\"r\">completed<\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\n<\/div>\r\n&nbsp;\r\n<div align=\"left\">\r\n<table class=\"fin-table acctstatement fw\">\r\n<tbody>\r\n<tr>\r\n<th scope=\"col\">Job Sheet - Finished Goods<\/th>\r\n<th class=\"r\" scope=\"col\">Job 1<\/th>\r\n<th class=\"r\" scope=\"col\">Job 2<\/th>\r\n<th class=\"r\" scope=\"col\">Job 3<\/th>\r\n<th class=\"r\" scope=\"col\">Total FG<\/th>\r\n<\/tr>\r\n<\/tbody>\r\n<tbody>\r\n<tr>\r\n<td colspan=\"5\"><span class=\"u-sr-only\">Subcategory, <\/span><strong>Direct Materials<\/strong><\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Wood<\/td>\r\n<td><\/td>\r\n<td class=\"r\">100<\/td>\r\n<td><\/td>\r\n<td class=\"r\">100<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Wheels\/trucks<\/td>\r\n<td><\/td>\r\n<td class=\"r\">100<\/td>\r\n<td><\/td>\r\n<td class=\"r\">100<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Direct Labor<\/td>\r\n<td><\/td>\r\n<td class=\"r\">600<\/td>\r\n<td><\/td>\r\n<td class=\"r\">600<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Overhead allocation<\/td>\r\n<td><\/td>\r\n<td class=\"r\">1800<\/td>\r\n<td><\/td>\r\n<td class=\"r\">1800<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Total Job Cost<\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>0<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>2600<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>0<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>2600<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<\/tr>\r\n<tr>\r\n<td><\/td>\r\n<td class=\"r\">sold and shipped<\/td>\r\n<td class=\"r\">warehouse<\/td>\r\n<td><\/td>\r\n<td class=\"r\">WIP<\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\n&nbsp;\r\n<div align=\"left\">\r\n<table class=\"fin-table acctstatement fw\">\r\n<tbody>\r\n<tr>\r\n<th scope=\"col\">Job Sheet - Cost of Goods Sold<\/th>\r\n<th class=\"r\" scope=\"col\">Job 1<\/th>\r\n<th class=\"r\" scope=\"col\">Job 2<\/th>\r\n<th class=\"r\" scope=\"col\">Job 3<\/th>\r\n<th class=\"r\" scope=\"col\">Total COGS<\/th>\r\n<\/tr>\r\n<\/tbody>\r\n<tbody>\r\n<tr>\r\n<td colspan=\"5\"><span class=\"u-sr-only\">Subcategory, <\/span><strong>Direct Materials<\/strong><\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Wood<\/td>\r\n<td class=\"r\">100<\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td class=\"r\">100<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Wheels\/trucks<\/td>\r\n<td class=\"r\">50<\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td class=\"r\">50<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Direct Labor<\/td>\r\n<td class=\"r\">400<\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td class=\"r\">400<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Overhead allocation<\/td>\r\n<td class=\"r\">1200<\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td class=\"r\">1200<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Total Job Cost<\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>1750<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>0<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>0<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>1750<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\n&nbsp;\r\n\r\n<\/div>\r\n<\/div>\r\n<div align=\"left\">\r\n<table class=\"fin-table gridded\">\r\n<thead>\r\n<tr>\r\n<th scope=\"col\">Date<\/th>\r\n<th scope=\"col\">Account\/Explanation<\/th>\r\n<th scope=\"col\">Debit<\/th>\r\n<th scope=\"col\">Credit<\/th>\r\n<\/tr>\r\n<\/thead>\r\n<tbody>\r\n<tr>\r\n<th scope=\"row\">Jul 31<\/th>\r\n<td class=\"highlight\">Cost of Goods Sold<\/td>\r\n<td class=\"r highlight\">\u00a0 \u00a0 \u00a0 \u00a0 1,750<\/td>\r\n<td class=\"highlight\"><\/td>\r\n<\/tr>\r\n<tr>\r\n<td><\/td>\r\n<td class=\"highlight\">\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Finished Goods Inventory<\/td>\r\n<td class=\"highlight\"><\/td>\r\n<td class=\"r highlight\">\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 1,750<\/td>\r\n<\/tr>\r\n<tr>\r\n<td><\/td>\r\n<td><em>To move Job 1 to Cost of Goods Sold<\/em><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\n&nbsp;\r\n\r\n<\/div>\r\n<img class=\"aligncenter\" src=\"https:\/\/lh3.googleusercontent.com\/H-JlqpFMph7MK9VLbov_19Iho1WdqGzg1OM5KyPaUzHQo4WL65zwSP4tsFpsSYYw9O02L9n1yg56SDEAKDxAtoOXL-LdgevFVaXxmyda2PECcyV-ubjWvmsx1zTIEF-hfmk2z1em\" alt=\"A journal entry dated July 31 shows a debit of $1,750 to Cost of Goods Sold and a credit of $1,750 to Finished Goods Inventory with the note \u201cTo move Job 1 to Cost of Goods Sold\u201d. Each line item in the journal entry points to the corresponding debit or credit on its respective t-account.\" width=\"1095\" height=\"807\" \/>\r\n\r\nThe Work in Process account now shows a balance of $100, and the Finished Goods account now shows a balance of $2,600, which represents the cost of Job 2. Job 1 is sold, and the cost of that job is now shown as Cost of Goods Sold and offsets the Sales Revenue of $2000. We can see that MaBoards made a gross profit of $250 on Job 1. That gross profit would go to pay selling, general, and administrative expenses and anything left over would be a net profit that Jackie Ma could either reinvest in the business or withdraw and spend on whatever she wants to spend it on.\r\n\r\nThere is one more step, and that is to account for under- or over-allocated Factory Overhead, but before we do that, check your understanding of recording finished goods and cost of goods sold.\r\n<div class=\"textbox tryit\">\r\n<h3>Practice Question<\/h3>\r\n[ohm_question hide_question_numbers=1]219041[\/ohm_question]\r\n\r\n<\/div>","rendered":"<div class=\"textbox learning-objectives\">\n<h3>Learning Outcomes<\/h3>\n<ul>\n<li>Record completion and sales of finished goods<\/li>\n<\/ul>\n<\/div>\n<h2>Completion of a Job<\/h2>\n<p>At the end of the month, Jackie sorts the job cards into two piles: jobs still in process (sitting on the workbench) and completed jobs. Job 1 was completed and shipped, and Job 2 is done but sitting in the warehouse waiting to be sold. She now has to update her accounting records to record the movement of the jobs from work in process to finished goods.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-1400 size-large\" src=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images\/wp-content\/uploads\/sites\/5469\/2021\/01\/06220737\/Screen-Shot-2021-05-06-at-2.33.01-PM-1024x493.png\" alt=\"Two horizontal flowcharts are shown. The first flow chart is labeled \u201cPhysical flow of inventory\u201d. It shows four boxes, from left to right, Materials storeroom, Production departments, Finished goods storeroom, and Delivered to customers. The second flowchart is labeled \u201cJob costing\u201d. It shows four boxes, from left to right, Raw Materials inventory, Work in Process inventory, Finished Goods inventory, and Cost of Goods Sold. Below Work in Process inventory, there are two additional boxes pointing to it, Direct labor and Manufacturing overhead. Two boxes are highlighted--Finished Goods inventory and Cost of Goods Sold.\" width=\"1024\" height=\"493\" \/><\/p>\n<div style=\"text-align: left;\">\n<div style=\"text-align: left;\">\n<table class=\"fin-table acctstatement fw\">\n<tbody>\n<tr>\n<th scope=\"col\">Job Sheet &#8211; WIP<\/th>\n<th class=\"r\" scope=\"col\">Job 1<\/th>\n<th class=\"r\" scope=\"col\">Job 2<\/th>\n<th class=\"r\" scope=\"col\">Job 3<\/th>\n<th class=\"r\" scope=\"col\">Total WIP<\/th>\n<\/tr>\n<\/tbody>\n<tbody>\n<tr>\n<td colspan=\"5\"><span class=\"u-sr-only\">Subcategory, <\/span><strong>Direct Materials<\/strong><\/td>\n<\/tr>\n<tr>\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Wood<\/td>\n<td><\/td>\n<td><\/td>\n<td class=\"r\">100<\/td>\n<td class=\"r\">100<\/td>\n<\/tr>\n<tr>\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Wheels\/trucks<\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<td class=\"r\">0<\/td>\n<\/tr>\n<tr>\n<td>Direct Labor<\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<td class=\"r\">0<\/td>\n<\/tr>\n<tr>\n<td>Overhead allocation<\/td>\n<td><\/td>\n<td><\/td>\n<td class=\"r\">0<\/td>\n<td class=\"r\">0<\/td>\n<\/tr>\n<tr>\n<td>Total Job Cost<\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>0<span class=\"u-sr-only\">Double line<\/span><\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>0<span class=\"u-sr-only\">Double line<\/span><\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>100<span class=\"u-sr-only\">Double line<\/span><\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>100<span class=\"u-sr-only\">Double line<\/span><\/td>\n<\/tr>\n<tr>\n<td><\/td>\n<td class=\"r\">completed<\/td>\n<td class=\"r\">completed<\/td>\n<td><\/td>\n<td><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<\/div>\n<p>&nbsp;<\/p>\n<div style=\"text-align: left;\">\n<table class=\"fin-table acctstatement fw\">\n<tbody>\n<tr>\n<th scope=\"col\">Job Sheet &#8211; Finished Goods<\/th>\n<th class=\"r\" scope=\"col\">Job 1<\/th>\n<th class=\"r\" scope=\"col\">Job 2<\/th>\n<th class=\"r\" scope=\"col\">Job 3<\/th>\n<th class=\"r\" scope=\"col\">Total FG<\/th>\n<\/tr>\n<\/tbody>\n<tbody>\n<tr>\n<td colspan=\"5\"><span class=\"u-sr-only\">Subcategory, <\/span><strong>Direct Materials<\/strong><\/td>\n<\/tr>\n<tr>\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Wood<\/td>\n<td class=\"r\">100<\/td>\n<td class=\"r\">100<\/td>\n<td><\/td>\n<td class=\"r\">200<\/td>\n<\/tr>\n<tr>\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Wheels\/trucks<\/td>\n<td class=\"r\">50<\/td>\n<td class=\"r\">100<\/td>\n<td><\/td>\n<td class=\"r\">150<\/td>\n<\/tr>\n<tr>\n<td>Direct Labor<\/td>\n<td class=\"r\">400<\/td>\n<td class=\"r\">600<\/td>\n<td><\/td>\n<td class=\"r\">1000<\/td>\n<\/tr>\n<tr>\n<td>Overhead allocation<\/td>\n<td class=\"r\">1200<\/td>\n<td class=\"r\">1800<\/td>\n<td><\/td>\n<td class=\"r\">3000<\/td>\n<\/tr>\n<tr>\n<td>Total Job Cost<\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>1750<span class=\"u-sr-only\">Double line<\/span><\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>2600<span class=\"u-sr-only\">Double line<\/span><\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>0<span class=\"u-sr-only\">Double line<\/span><\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>4350<span class=\"u-sr-only\">Double line<\/span><\/td>\n<\/tr>\n<tr>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<p>Costs of completed jobs that are moved physically to the finished goods area of the factory also have to be moved in the accounting records from Work in Process to Finished Goods.<\/p>\n<div style=\"text-align: left;\">\n<table class=\"fin-table gridded\">\n<thead>\n<tr>\n<th scope=\"col\">Date<\/th>\n<th scope=\"col\">Account\/Explanation<\/th>\n<th scope=\"col\">Debit<\/th>\n<th scope=\"col\">Credit<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<th scope=\"row\">Jul 31<\/th>\n<td class=\"highlight\">Finished Goods Inventory<\/td>\n<td class=\"r highlight\">\u00a0 \u00a0 \u00a0 \u00a0 4,350<\/td>\n<td class=\"highlight\"><\/td>\n<\/tr>\n<tr>\n<td><\/td>\n<td class=\"highlight\">\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Work in Process<\/td>\n<td class=\"highlight\"><\/td>\n<td class=\"r highlight\">\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 4,350<\/td>\n<\/tr>\n<tr>\n<td><\/td>\n<td><em>To move Jobs 1 and 2 to Finished Goods<\/em><\/td>\n<td><\/td>\n<td><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>&nbsp;<\/p>\n<\/div>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter\" src=\"https:\/\/lh5.googleusercontent.com\/sOea1eFr8obGCO9ij40TPr_byDosh6lWCx4CnPDi6nAEZsh-fm3s5F83EuQLZEtDhIcKcxzLjZmn8sczK7yBJXhAk9DLPl5ySR9EC64mqsn353uxW_F86ESzVpyMRN74lFwDhGFf\" alt=\"A journal entry dated July 31 shows a debit of $4,350 to Finished Goods Inventory and a credit of $4,350 to Work in Process with the note \u201cTo move Jobs 1 and 2 to Finished Goods\u201d. Each line item in the journal entry points to the corresponding debit or credit on its respective t-account.\" width=\"1087\" height=\"767\" \/><\/p>\n<p>Posting this entry to WIP leaves a balance in that account of $100, which comports to reality. If an auditor walked into the shop at the end of the day on July 31, she would see two units of wood on the workbench, which equates to a cost of $100. Looking at the job card, she would see that no labor had been applied (and that would probably be obvious just looking at the untouched wood as well). It is imperative that the accounting records reflect physical reality.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-1163 size-full\" src=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images\/wp-content\/uploads\/sites\/5469\/2021\/01\/29202559\/5.3.1a.png\" alt=\"A t-account for Work in Process shows a debit of $100 beginning balance, debits of $450, $100, $700, $100, and $3000, a credit of $4,350 dated for July 31, and a debit of $100 ending balance.\" width=\"369\" height=\"355\" \/><\/p>\n<p>&nbsp;<\/p>\n<h2>Recording Cost of Goods Sold<\/h2>\n<p>Observing the Finished Goods inventory account, we see in the accounting records that both Job 1 and Job 2 are listed in the ledger, but in reality, Job 1 is gone and out the door while only Job 2 remains. Therefore, Job 1 is determined to be Cost of Goods Sold, and Jackie needs to make a journal entry to reflect that.<\/p>\n<div style=\"text-align: left;\">\n<table class=\"fin-table acctstatement fw\">\n<tbody>\n<tr>\n<th scope=\"col\">Job Sheet &#8211; WIP<\/th>\n<th class=\"r\" scope=\"col\">Job 1<\/th>\n<th class=\"r\" scope=\"col\">Job 2<\/th>\n<th class=\"r\" scope=\"col\">Job 3<\/th>\n<th class=\"r\" scope=\"col\">Total WIP<\/th>\n<\/tr>\n<\/tbody>\n<tbody>\n<tr>\n<td colspan=\"5\"><span class=\"u-sr-only\">Subcategory, <\/span><strong>Direct Materials<\/strong><\/td>\n<\/tr>\n<tr>\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Wood<\/td>\n<td><\/td>\n<td><\/td>\n<td class=\"r\">100<\/td>\n<td class=\"r\">100<\/td>\n<\/tr>\n<tr>\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Wheels\/trucks<\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<td class=\"r\">0<\/td>\n<\/tr>\n<tr>\n<td>Direct Labor<\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<td class=\"r\">0<\/td>\n<\/tr>\n<tr>\n<td>Overhead allocation<\/td>\n<td><\/td>\n<td><\/td>\n<td class=\"r\">0<\/td>\n<td class=\"r\">0<\/td>\n<\/tr>\n<tr>\n<td>Total Job Cost<\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>0<span class=\"u-sr-only\">Double line<\/span><\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>0<span class=\"u-sr-only\">Double line<\/span><\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>100<span class=\"u-sr-only\">Double line<\/span><\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>100<span class=\"u-sr-only\">Double line<\/span><\/td>\n<\/tr>\n<tr>\n<td><\/td>\n<td class=\"r\">completed<\/td>\n<td class=\"r\">completed<\/td>\n<td><\/td>\n<td><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<p>&nbsp;<\/p>\n<div style=\"text-align: left;\">\n<table class=\"fin-table acctstatement fw\">\n<tbody>\n<tr>\n<th scope=\"col\">Job Sheet &#8211; Finished Goods<\/th>\n<th class=\"r\" scope=\"col\">Job 1<\/th>\n<th class=\"r\" scope=\"col\">Job 2<\/th>\n<th class=\"r\" scope=\"col\">Job 3<\/th>\n<th class=\"r\" scope=\"col\">Total FG<\/th>\n<\/tr>\n<\/tbody>\n<tbody>\n<tr>\n<td colspan=\"5\"><span class=\"u-sr-only\">Subcategory, <\/span><strong>Direct Materials<\/strong><\/td>\n<\/tr>\n<tr>\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Wood<\/td>\n<td><\/td>\n<td class=\"r\">100<\/td>\n<td><\/td>\n<td class=\"r\">100<\/td>\n<\/tr>\n<tr>\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Wheels\/trucks<\/td>\n<td><\/td>\n<td class=\"r\">100<\/td>\n<td><\/td>\n<td class=\"r\">100<\/td>\n<\/tr>\n<tr>\n<td>Direct Labor<\/td>\n<td><\/td>\n<td class=\"r\">600<\/td>\n<td><\/td>\n<td class=\"r\">600<\/td>\n<\/tr>\n<tr>\n<td>Overhead allocation<\/td>\n<td><\/td>\n<td class=\"r\">1800<\/td>\n<td><\/td>\n<td class=\"r\">1800<\/td>\n<\/tr>\n<tr>\n<td>Total Job Cost<\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>0<span class=\"u-sr-only\">Double line<\/span><\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>2600<span class=\"u-sr-only\">Double line<\/span><\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>0<span class=\"u-sr-only\">Double line<\/span><\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>2600<span class=\"u-sr-only\">Double line<\/span><\/td>\n<\/tr>\n<tr>\n<td><\/td>\n<td class=\"r\">sold and shipped<\/td>\n<td class=\"r\">warehouse<\/td>\n<td><\/td>\n<td class=\"r\">WIP<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>&nbsp;<\/p>\n<div style=\"text-align: left;\">\n<table class=\"fin-table acctstatement fw\">\n<tbody>\n<tr>\n<th scope=\"col\">Job Sheet &#8211; Cost of Goods Sold<\/th>\n<th class=\"r\" scope=\"col\">Job 1<\/th>\n<th class=\"r\" scope=\"col\">Job 2<\/th>\n<th class=\"r\" scope=\"col\">Job 3<\/th>\n<th class=\"r\" scope=\"col\">Total COGS<\/th>\n<\/tr>\n<\/tbody>\n<tbody>\n<tr>\n<td colspan=\"5\"><span class=\"u-sr-only\">Subcategory, <\/span><strong>Direct Materials<\/strong><\/td>\n<\/tr>\n<tr>\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Wood<\/td>\n<td class=\"r\">100<\/td>\n<td><\/td>\n<td><\/td>\n<td class=\"r\">100<\/td>\n<\/tr>\n<tr>\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Wheels\/trucks<\/td>\n<td class=\"r\">50<\/td>\n<td><\/td>\n<td><\/td>\n<td class=\"r\">50<\/td>\n<\/tr>\n<tr>\n<td>Direct Labor<\/td>\n<td class=\"r\">400<\/td>\n<td><\/td>\n<td><\/td>\n<td class=\"r\">400<\/td>\n<\/tr>\n<tr>\n<td>Overhead allocation<\/td>\n<td class=\"r\">1200<\/td>\n<td><\/td>\n<td><\/td>\n<td class=\"r\">1200<\/td>\n<\/tr>\n<tr>\n<td>Total Job Cost<\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>1750<span class=\"u-sr-only\">Double line<\/span><\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>0<span class=\"u-sr-only\">Double line<\/span><\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>0<span class=\"u-sr-only\">Double line<\/span><\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>1750<span class=\"u-sr-only\">Double line<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>&nbsp;<\/p>\n<\/div>\n<\/div>\n<div style=\"text-align: left;\">\n<table class=\"fin-table gridded\">\n<thead>\n<tr>\n<th scope=\"col\">Date<\/th>\n<th scope=\"col\">Account\/Explanation<\/th>\n<th scope=\"col\">Debit<\/th>\n<th scope=\"col\">Credit<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<th scope=\"row\">Jul 31<\/th>\n<td class=\"highlight\">Cost of Goods Sold<\/td>\n<td class=\"r highlight\">\u00a0 \u00a0 \u00a0 \u00a0 1,750<\/td>\n<td class=\"highlight\"><\/td>\n<\/tr>\n<tr>\n<td><\/td>\n<td class=\"highlight\">\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Finished Goods Inventory<\/td>\n<td class=\"highlight\"><\/td>\n<td class=\"r highlight\">\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 1,750<\/td>\n<\/tr>\n<tr>\n<td><\/td>\n<td><em>To move Job 1 to Cost of Goods Sold<\/em><\/td>\n<td><\/td>\n<td><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>&nbsp;<\/p>\n<\/div>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter\" src=\"https:\/\/lh3.googleusercontent.com\/H-JlqpFMph7MK9VLbov_19Iho1WdqGzg1OM5KyPaUzHQo4WL65zwSP4tsFpsSYYw9O02L9n1yg56SDEAKDxAtoOXL-LdgevFVaXxmyda2PECcyV-ubjWvmsx1zTIEF-hfmk2z1em\" alt=\"A journal entry dated July 31 shows a debit of $1,750 to Cost of Goods Sold and a credit of $1,750 to Finished Goods Inventory with the note \u201cTo move Job 1 to Cost of Goods Sold\u201d. Each line item in the journal entry points to the corresponding debit or credit on its respective t-account.\" width=\"1095\" height=\"807\" \/><\/p>\n<p>The Work in Process account now shows a balance of $100, and the Finished Goods account now shows a balance of $2,600, which represents the cost of Job 2. Job 1 is sold, and the cost of that job is now shown as Cost of Goods Sold and offsets the Sales Revenue of $2000. We can see that MaBoards made a gross profit of $250 on Job 1. That gross profit would go to pay selling, general, and administrative expenses and anything left over would be a net profit that Jackie Ma could either reinvest in the business or withdraw and spend on whatever she wants to spend it on.<\/p>\n<p>There is one more step, and that is to account for under- or over-allocated Factory Overhead, but before we do that, check your understanding of recording finished goods and cost of goods sold.<\/p>\n<div class=\"textbox tryit\">\n<h3>Practice Question<\/h3>\n<p><iframe loading=\"lazy\" id=\"ohm219041\" class=\"resizable\" src=\"https:\/\/ohm.lumenlearning.com\/multiembedq.php?id=219041&theme=oea&iframe_resize_id=ohm219041\" width=\"100%\" height=\"150\"><\/iframe><\/p>\n<\/div>\n\n\t\t\t <section class=\"citations-section\" role=\"contentinfo\">\n\t\t\t <h3>Candela Citations<\/h3>\n\t\t\t\t\t <div>\n\t\t\t\t\t\t <div id=\"citation-list-162\">\n\t\t\t\t\t\t\t <div class=\"licensing\"><div class=\"license-attribution-dropdown-subheading\">CC licensed content, Original<\/div><ul class=\"citation-list\"><li>Introduction to Month-end Reporting. <strong>Authored by<\/strong>: Joseph Cooke. <strong>Provided by<\/strong>: Lumen Learning. <strong>License<\/strong>: <em><a target=\"_blank\" rel=\"license\" href=\"https:\/\/creativecommons.org\/licenses\/by\/4.0\/\">CC BY: Attribution<\/a><\/em><\/li><\/ul><div class=\"license-attribution-dropdown-subheading\">Lumen Learning authored content<\/div><ul class=\"citation-list\"><li>Job costing inventory flowchart. <strong>Provided by<\/strong>: Lumen Learning. <strong>License<\/strong>: <em><a target=\"_blank\" rel=\"license\" href=\"https:\/\/creativecommons.org\/licenses\/by\/4.0\/\">CC BY: Attribution<\/a><\/em><\/li><\/ul><\/div>\n\t\t\t\t\t\t <\/div>\n\t\t\t\t\t <\/div>\n\t\t\t <\/section>","protected":false},"author":364389,"menu_order":11,"template":"","meta":{"_candela_citation":"[{\"type\":\"original\",\"description\":\"Introduction to Month-end Reporting\",\"author\":\"Joseph Cooke\",\"organization\":\"Lumen Learning\",\"url\":\"\",\"project\":\"\",\"license\":\"cc-by\",\"license_terms\":\"\"},{\"type\":\"lumen\",\"description\":\"Job costing inventory flowchart\",\"author\":\"\",\"organization\":\"Lumen Learning\",\"url\":\"\",\"project\":\"\",\"license\":\"cc-by\",\"license_terms\":\"\"}]","CANDELA_OUTCOMES_GUID":"","pb_show_title":"on","pb_short_title":"","pb_subtitle":"","pb_authors":[],"pb_section_license":""},"chapter-type":[],"contributor":[],"license":[],"class_list":["post-162","chapter","type-chapter","status-publish","hentry"],"part":29,"_links":{"self":[{"href":"https:\/\/courses.lumenlearning.com\/wm-managerialaccounting\/wp-json\/pressbooks\/v2\/chapters\/162","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/courses.lumenlearning.com\/wm-managerialaccounting\/wp-json\/pressbooks\/v2\/chapters"}],"about":[{"href":"https:\/\/courses.lumenlearning.com\/wm-managerialaccounting\/wp-json\/wp\/v2\/types\/chapter"}],"author":[{"embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/wm-managerialaccounting\/wp-json\/wp\/v2\/users\/364389"}],"version-history":[{"count":18,"href":"https:\/\/courses.lumenlearning.com\/wm-managerialaccounting\/wp-json\/pressbooks\/v2\/chapters\/162\/revisions"}],"predecessor-version":[{"id":2438,"href":"https:\/\/courses.lumenlearning.com\/wm-managerialaccounting\/wp-json\/pressbooks\/v2\/chapters\/162\/revisions\/2438"}],"part":[{"href":"https:\/\/courses.lumenlearning.com\/wm-managerialaccounting\/wp-json\/pressbooks\/v2\/parts\/29"}],"metadata":[{"href":"https:\/\/courses.lumenlearning.com\/wm-managerialaccounting\/wp-json\/pressbooks\/v2\/chapters\/162\/metadata\/"}],"wp:attachment":[{"href":"https:\/\/courses.lumenlearning.com\/wm-managerialaccounting\/wp-json\/wp\/v2\/media?parent=162"}],"wp:term":[{"taxonomy":"chapter-type","embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/wm-managerialaccounting\/wp-json\/pressbooks\/v2\/chapter-type?post=162"},{"taxonomy":"contributor","embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/wm-managerialaccounting\/wp-json\/wp\/v2\/contributor?post=162"},{"taxonomy":"license","embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/wm-managerialaccounting\/wp-json\/wp\/v2\/license?post=162"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}