Cost Accounting Cycle2

8/8/2019 Cost Accounting Cycle2

1/21

ISLAMABAD COMMERCE COLLEGE FOR WOMENF-10/3, ISLAMABAD


2/21

LIST OF ITEMSNOT included in HEAD Office Books

y Material Control

yW-i-p Controly FOH Control

y Finished goods control

y FOH Applied


3/21

LIST OF ITEMSNOT included in Factory Office books

y Voucher payable

y Payroll controlyAccrued payroll

y Marketing overhead

yAdministrative overhead

y Cost of goods sold

y Prepaid insurance

yAllowance for depreciation


4/21

GENERAL JOURNAL HEAD OFFICE BOOKS FACTORYOFFICEBOOKS

PURCHASING MATERIAL/stores/shipping supplies TO SUPPLIER/VENDOR:

Material controlVoucher payable

Factory LedgerVoucher payable

Material controlGeneral Ledger

RETURNING MATERIAL /stores/shipping supplies TO SUPPLIER/VENDOR:

Voucher PayableMaterial Control

Voucher payableFactory Ledger

General LedgerMaterial control

ISSUANCE OF MATERIAL TO FACTORY FROM THE STORE ROOM:

W-i-p controlF.O.H controlSelling overhead control

Material control

Selling overhead controlFactory Ledger

W-i-p controlF.O.H controlGeneral Ledger

Material control

RETURN OF UNUSED MATERIAL FROM THE FACTORY TO STORE ROOM:

Material controlw-i-p controlfoh controlSelling overhead con

Factory LedgerSelling overhead cont

Material controlGeneral LedgerW-i-p control

F.O.H control


5/21


RETURN OF UNUSED SHIPPING SUPPLIES FROM FACTORY

Material controlSelling overhead con

Factory LedgerSelling overhead cont

Material controlGeneral Ledger

RETURN OF UNUSED DIRECT MATERIAL FROM FACTORY

Material controlw-i-p control

Material controlW-i-p control

RETURN OF UNUSED INDIRECT MATERIAL FROM FACTORY

Material controlF.O.H control

Material controlF.O.H control

REQUISITION OF DIRECT MATERIAL TO FACTORY

W-i-p controlMaterial control

W-i-p controlMaterial control

REQUISITION OF INDIRECT MATERIAL TO FACTORY

F.O.H controlMaterial control

F.O.H controlMaterial control


6/21


REQUISITION OF SHIPPING SUPPLIES TO FACTORY:

Selling overhead controlMaterial control

Selling overhead controlFactory Ledger

General LedgerMaterial control

PAYROLL ANALYSIS/DISTRIBUTION OF PAYROLL/REDORDING GROSSPAYROLL:

W-i-p control

Foh controlSelling overhead controlAdministrative overhead

Payroll control

Factory ledger

Selling overhead controlAdministrative overhead

Payroll control

W-i-p control

F.O.H controlGeneral ledger

DEDUCTIONS BY EMPLOYEE /NET PAYROLL:

Payroll controlincome tax with heldProvident fund payable

Accrued payroll

Payroll controlincome tax with heldProvident fund payable

Accrued payroll


7/21


PREPARINGVOUCHER:

Accrued payrollVoucher payable


VOUCHER PAID:

Voucher payablecash

Voucher payablecash

EMPLOYERS CONTRIBUTION OF PROVIDENT FUND:

F.O.H controlSelling overhead controlAdministrative overhead

prov.fund payable

Factory ledgerSelling overhead controlAdministrative overhead

prov.fund payable


ACTUAL FOH COST RECORDED

F.O.H controlAllowance for deprePrepaid insuranceVouchers payable

Factory ledgerAllowance for deprePrepaid insuranceVouchers payable

F.O.H controlgeneral ledger


8/21


SELLING OVERHEAD COSTS RECORDED:

Selling overhead controlAllowance for deprePrepaid insuranceVouchers payable

Selling overhead controlAllowance for deprePrepaid insuranceVouchers payable

ADMINISTRATION COSTS RECORDED:

Admini overhead controlAllowance for deprePrepaid insuranceVouchers payable

Admini overhead controlAllowance for deprePrepaid insuranceVouchers payable

RECORDING DEPRECIATION FOR THE THREE DEPARTMENTS:

F.O.H controlSelling overhead controlAdmini overhead control

Allowance for depre

Factory ledgerSelling overhead controlAdmini overhead control

Allowance for depre



9/21


RECORDING INSURANCE FOR THE THREE DEPARTMENTS:

F.O.H controlSelling overhead controlAdmini overhead control

Prepaid insurance

F actory ledgerSelling overhead controlAdmini overhead control

Prepaid insurance


RECORDING OTHER COSTS FOR THE THREE DEPARTMENTS:F.O.H controlSelling overhead controlAdmini overhead control

vouchers payable

Factory ledgerSelling overhead controlAdmini overhead control

vouchers payable


COMPLETION OF FINISHED GOODS/COST OF GOODS COMPLETED:

Finished goods controlW-i-p control


SALES OF COMPLETED GOODS/COST OF GOODS SOLD:

Cost of goods soldFinished goods control

Cost of goods soldFactory ledger

General ledgerFinished goods control


10/21

PAYROLL IS MAINTAINED AT HEAD OFFICEHEAD OFFICE FACTORY OFFICE

PAYROLL ANALYSIS/DISTRIBUTION OF PAYROLL/REDORDING GROSS

PAYROLL:


Payroll control

W-i-p controlF.O.H control

General ledger

DEDUCTIONS BY EMPLOYEE /NET PAYROLL:Payroll control

income tax with heldProvident fund payable

Accrued payroll

PREPARINGVOUCHER:


VOUCHER PAID:

Voucher payablecash


11/21


12/21

PAYROLL CONTROL IS NOT USED AT ALL/PAYROLL

CLEARING ACCOUNT IS NOT USEDHEAD OFFICE FACTORY OFFICE

PAYROLL ANALYSIS/DISTRIBUTION OF PAYROLL/REDORDING GROSSPAYROLL AND DEDUCTIONS BY EMPLOYEE /NET PAYROLL:


Payroll controlPayroll controlincome tax with heldProvident fund payable

Accrued payroll


General ledger

PREPARINGVOUCHER:


VOUCHER PAID:

Voucher payable

cash


13/21

PAYROLL CONTROL IS NOT USED AT ALL/PAYROLL

CLEARING ACCOUNT IS NOT USEDHEAD OFFICE FACTORY OFFICE



prov.fund payable



14/21

FACTORY MAINTAINS ITS OWN PAYROLLHEAD OFFICE FACTORY OFFICE

PAYROLL ANALYSIS/DISTRIBUTION OF PAYROLL/REDORDING GROSS

PAYROLL :

Selling overhead controlAdmini overhead control

Payroll control


Factory payroll

DEDUCTIONS BY EMPLOYEE /NET PAYROLL:

Factory ledgerPayroll control

Income tax with heldProv.fund payable

Accrued payroll

Factory payrollGeneral ledger

PREPARINGVOUCHER:


VOUCHER PAID:

Voucher payable

cash


15/21

FACTORY MAINTAINS ITS OWN PAYROLL

HEAD OFFICE FACTORY OFFICE



prov.fund payable



16/21

DEFECTIVE PRODUCTION

y Units which require additional work.

y Defects that can be removed by putting more effortand additional cost.


17/21

How to treat the defective and

spoiled production?y Defective units are caused by normal human or

machine fault. It is wise to spread the cost of rework to

all units/entire production which are goods units.y Spoilage is normal manufacturing condition then the

cost should be absorbed by all good units.

y Sometimes defective and spoiled units are charged to a

particular job because of strict specifications by acustomer which are not observed in usual productionof the company.


18/21

Defective productionCost of rework charged to job Cost of rework charged to factory

overhead

Recording initial work or productionW-i-p materialW-i-p laborW-i-p foh

Mat contrPayroll contr

Foh applied

W-i-p materialW-i-p laborW-i-p foh

Mat contrPayroll contr

Foh appliedRecording additional work /rework


Mat contrPayroll contrFoh applied

Foh contrMat contrPayroll contrFoh applied

Completion of order




19/21

SPOILED PRODUCTIONy Spoiled units are always sold as seconds below cost.

y These are those faulty units of output which can not be

reworked to bring them up to standard qualityspecifications.


20/21

Spoiled productionCost of rework charged to job Cost of rework charged to factory

overhead/entire production

Recording initial work or production


Mat contr

Payroll contrFoh applied


Mat contr

Payroll contrFoh applied

Recording spoiled goods

Spolied goodsW-i-p materialW-i-p labor

W-i-p foh

Spoiled goodsFoh contr

W-i-p material

W-i-p laborW-i-p foh

Completion of order




21/21

Thank you for today

Documents

Cost Accounting Cycle2