Integrated & non integral accounts part ii

Journal Entries under Non-Integrated accounting system of cost accounting

1. Integrated and Non-integrated Accounts – II (Journal Entries under Non-integrated System) Mahesh Chandra Sharma Associate Professor, Department of Commerce Shaheed Bhagat Singh Evening College (University of Delhi)

2. Journal Entries Cost Books Financial Books 1. Receipts of materials into store (cash and Credit Purchases)  Stores Ledger Control A/c Dr. Purchases A/c Dr. To G eneral Ledger Adjustment A/c Cost Ledger Control A/c (Memo.) Dr. To Cash A/c or Creditors A/c In Stores Ledger: Individual stores Accounts shall be debited. 2. Receipts of materials for direct issue – went to production department directly Cost Ledger: For Cash /Credit Purchases:  Work-in-progress Ledger Control A/c Dr. Purchases A/c Dr. To G eneral Ledger Adjustment A/c Cost Ledger Control A/c (Memorandum) Dr. To Cash A/c or Creditors A/c Job Ledger: Debit individual Job or Product A/c for which materials have been received

3. Journal Entries Cost Books Financial Books 3. For issue of direct materials  Work-in-progress Ledger Control A/c Dr. No Entry To Stores Ledger Control A/c In Job Ledger: Individual Jobs account shall be debited for which materials have been issued In Stores Ledger: Individual Store accounts shall be credited. 4. For issue of indirect materials to factory, office and selling and distribution departments Cost Ledger:  Works Overheads Control A/c Dr. No Entry  Office Overheads Control A/c Dr.  Selling & Distr. Overheads Control A/c Dr. To Stores Ledger Control A/c In Stores Ledger: Individual Store accounts shall be credited.

4. Journal Entries Cost Books Financial Books 5. For issue of materials for capital work – for creating assets  Capital WIP Control A/c Dr.  Asset A/c Dr. To Stores Ledger Control A/c To Purchases A/c 6. For return of materials/store items to suppliers Cost Ledger:   G eneral Ledger Adjustment A/c Dr. Creditors A/c Dr. To Stores Ledger Adjustment A/c To Purchase Returns A/c To Cost Ledger Control A/c (Memo.) In Stores Ledger: Individual stores Accounts shall be credited.

5. Journal Entries Cost Books Financial Books 7. For return of direct materials from production to store In Cost Ledger   Stores Ledger Control A/c Dr. No Entry To WIP Ledger Control A/c In Stores Ledger: Individual Store accounts shall be debited. In Jobs Ledger: Individual Jobs accounts shall be credited. 8. For return of indirect materials from production to store In Cost Ledger   Stores Ledger Control A/c Dr. No Entry   To Works Overheads Control A/c   To Office Overheads Control A/c   To S & D Overheads Control A/c

6. Journal Entries Cost Books Financial Books 9. For transfer of materials from one job (Job No.1) to another job (Job No.2) In Job or Work-in-Progress Ledger: Job No. 2 A/c Dr. No Entry To Job No. 1 A/c Note: No entry is required in Work-in-Progress Control A/c or Stores Ledger Control A/c. 10. For normal loss of materials No entry will be required 11. For abnormal loss of materials  Costing P & L A/c Dr.  P & L A/c Dr. To Stores Ledger Control A/c To Purchases or Trading A/c 12. For payment to creditors No Entry Creditors A/c Dr. To cash/Bank A/c

7. Journal Entries Cost Books Financial Books 13. For Wages/Salaries Paid   Wages Control A/c Dr.   Wages A/c Dr. To Gen. Ledger Adjustment A/c Cost Ledger Control A/c (Memo.) Dr. To Cash or Bank A/c 14. For allocation of direct wages to production Work-in-progress Ledger Control A/c Dr. No Entry To Wages Control A/c 15. For apportionment of indirect wages to factory, office and selling and distribution departments  Works Overheads Control A/c Dr. No Entry  Office Overheads Control A/c Dr.  Selling & Distr. Overheads Control A/c Dr. To Wages Control A/c

8. Journal Entries Cost Books Financial Books 16. For payment of direct expenses Work-in-progress Ledger Control A/c Dr. Direct Expenses A/c Dr. To G eneral Ledger Adjustment A/c Cost Ledger Control A/c (Memo.) Dr. To Cash or Bank A/c 17. For payment of Factory, Office and Selling & Distribution Expenses Cost Ledger:  Works Overheads Control A/c Dr.  Works Expenses A/c Dr.  Office Overheads Control A/c Dr.  Office Expenses A/c Dr.  Selling & Distr. Overheads Control A/c Dr.  Selling & Distribution Expenses A/c Dr. To G eneral Ledger Adjustment A/c Cost Ledger Control A/c (Memorandum) Dr. To Cash A/c

9. Journal Entries Cost Books Financial Books 18. For absorption of works overheads to Jobs/Products In Cost Ledger  Work-in-Progress Ledger Control A/c Dr. No Entry   To Works Overheads A/c   In Job or Work-in-Progress Ledger: Individual Jobs/Product accounts will be debited. 19. For absorption of office overheads to Jobs/Products In Cost Ledger  Finished Goods Ledger Control A/c Dr. No Entry   To Office Overheads A/c In Finished Goods Ledger: Individual Jobs/Product accounts will be debited.

10. Journal Entries Cost Books Financial Books 20. For absorption of S & D overheads to Jobs/Products In Cost Ledger  Cost of Sales A/c Dr. No Entry   To S & D Overheads A/c 21. For over-absorption of overheads Respective Overheads Control A/c Dr.   To Overheads Adjustment A/c OR No Entry   To Costing P & L A/c 22. For under-absorption of overheads  Overheads Adjustment A/c OR Dr. No Entry  Costing P & L A/c To Respective Overheads Control A/c

11. Journal Entries Cost Books Financial Books 23. Transfer of Finished Goods completed   Finished Goods Ledger Control A/c Dr. NO ENTRY To WIP Ledger Control A/c 24. Transfer of Finished Goods sold Cost of Sales A/c Dr. NO ENTRY To Finished Goods Ledger Control A/c 25. Transfer of Cost of Sales (of Goods sold) Costing P & L A/c Dr. NO ENTRY To Cost of Sales A/c

12. Journal Entries Cost Books Financial Books 26. For sales Gen. Ledger Adjustment A/c Dr. Cash/Bank/Debtors A/c Dr. To Costing P & L A/c To Sales A/c To Cost Ledger Control A/c (Memo.) 27. For collection of credit sales No Entry Cash/Bank A/c Dr. To Debtors A/c 28. For abnormal loss of goods in production process   Costing P & L A/c Dr. P & L A/c Dr. To WIP Ledger Control A/c To Purchase/Trading A/c

13. Journal Entries Cost Books Financial Books 29. For abnormal loss of finished goods   Costing P & L A/c Dr. P & L A/c Dr. To Finished Goods Ledger Control A/c To Purchase/Trading A/c 30. For Net Profit Costing P & L A/c Dr. P & L A/c Dr. To Gen. Ledger Adjustment A/c Cost Ledger Control A/c (Memo.) Dr. To Capital A/c For Net Loss Capital A/c Dr. Gen. Ledger Adjustment A/c Dr. To P & L A/c To Costing P & L A/c To Cost Ledger Control A/c (Memo.)

14. THANKS Continued…….Part -III