Manufacturing Accounting
Chapter 26
26 - 1
Learning Objective 1
Preparing a cost of goods
manufacturing schedule.
26 - 2
Learning Unit 26-1

Manufacturing costs must be separated from
all other selling and administrative costs.
Manufacturing
Raw material
Direct Labor
Overhead
Administrative
Management
Sales Personnel
Administrative
26 - 3
Learning Unit 26-1
Direct Materials:
 Beginning inventory
+ Net purchases
– Ending inventory
= Direct material cost



+
+
+
=
–
=
Work-in-Process Inventory:
Beginning inventory
Direct material cost
Direct labor
Manufacturing overhead
Total manufacturing costs
Ending inventory
Cost of goods manufactured
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Learning Unit 26-1
Raw materials
used
Direct labor
Manufacturing
overhead
Finished
Goods
Inventory
WIP
Inventory
Cost of goods
sold
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Learning Unit 26-1
Merchandising Co.
Beginning merchandise inventory
+ Net purchases
= Cost of merchandise available for sale
– Ending merchandise inventory
= Cost of goods sold
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Learning Unit 26-1
Manufacturing Co.
Beginning finished goods inventory
+ Cost of goods manufactured
= Cost of goods available for sale
– Ending finished goods inventory
= Cost of goods sold
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Learning Objective 2
Journalizing transactions recording
the manufacturing process.
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Learning Unit 26-2
Source documents provide proof of
transactions.
 Receiving reports acknowledge receipt
of goods.
 Material requisitions are requests for
materials from storage areas.

26 - 9
Receiving Report
Received from Adams Company
Receiving Report #1031
Quantity
Description
50 Gals.
Paint
Date Received: 6/20/0x
Unit Price
Total Price
$6.50/Gallon
$325.00
Inspected By______________________
Received By______________________
26 - 10
Materials Requisition
Materials Requisition
Date: June 20, 200x
Number: 3648
From: Finishing Department
Quantity
Description
Unit Price
Total Price
8Gal.
White Paint
$6.50/Gallon
$52.00
Inspected By _______________________
Received By________________________
26 - 11
Learning Unit 26-2
Clock cards list time worked for each
employee for specific activities.
 Lot tickets reflect movement of products
through the manufacturing floor.
 Labor distribution reports track the hours
and dollars of labor to departments and
products.
 Bills of lading are shipping documents.

26 - 12
Learning Unit 26-2
Flow charts illustrate the movement of the
material, labor, and overhead through the
operation.
 They support journal entries.
 Overhead – Control is debited as costs are
incurred.
 Overhead – Applied is credited when
overhead is applied to products.

26 - 13
Learning Unit 26-2
Debit Work-in-Process Inventory
Credit Raw Material Inventory
Debit Work-in-Process Inventory
Credit Payroll
Debit Overhead – Control
Credit Supplies Inventory
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Learning Unit 26-2
Debit Overhead – Control
Credit Payroll
Debit Overhead – Control
Credit Supervision Salaries
Rent Expense
Depreciation Expense
Electricity Expense
26 - 15
Learning Unit 26-2
Debit Work-in-Process Inventory
Credit Overhead – Applied
Debit Finished Goods Inventory
Credit Work-in-Process Inventory
Debit Cost of Goods Sold
Credit Finished Goods Inventory
26 - 16
Learning Objective 3
Preparing a worksheet
for a manufacturing company.
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Learning Unit 26-3

–
–
–
–
The worksheet for a manufacturing
company is used to produce the following:
Statement of cost of goods manufactured
Income statement
Statement of retained earnings
Balance sheet
26 - 18
Learning Unit 26-3
Trial Adjust.
Balance
Cost of
Goods
Income Balance
Manufactured Statement Sheet
Statement of Cost of
Goods Manufactured
Balance
Sheet
Statement of
Retained Earnings
Income
Statement
26 - 19
End of Chapter 26
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