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General Accounting Entries for Materials Homework Help, Tutoring
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General Accounting Entries for Materials Assignment / Homework Help

Defectives:

     Materials which, in the course of manufacturing process, develop some imperfection are known as defective goods. These can be made into perfect finished products after incurring some additional material & labour cost. Thus defectives are the same as spoilage which are economically capable of being corrected into perfect finished goods.
In the same way as spoilage is treated (when corrected), defectives are also treated i.e. the job from where defectives occurred, the cost of rectification is charged or it is charged to production overhead which is then spread over all jobs.

Wastes:

     That portion of basic raw materials, which is lost in processing, is known as wastes. It has no recovery value. Wastes may be normal or abnormal. Normal waste is part of cost, whereas from cost abnormal waste is excluded & is charged to costing profit & loss account. From causes beyond control, normal waste arises, while from controllable causes like negligence, inefficiency etc. abnormal wastes arise.

General Accounting Entries for Materials:

  1. For the value of materials chargeable to jobs-

    2. Work-in-Progress A/c              Dr

                To Materials control A/c

  2. For scraps identified with any job-

    3. (i)Scrap Materials A/c             Dr

                            To Work-in-Progress A/c       

    (Being value of scraps credited to job)

    (ii)Bank/Debtors A/c               Dr

                            To Scrap Materials A/c

    (Being sale proceeds of scrap materials)

  3. For sale value of scraps of general nature-

    4. Bank/Debtors A/c                    Dr

                To Factory Overhead A/c

    (Being sale proceeds of scraps credited to production overhead)

    1. For the value of scraps which are insignificant-

                (i) Bank/Debtors A/c               Dr

                            To Miscellaneous Income A/c

                (Being sale proceeds of scraps credited to miscellaneous income)

                (ii) Miscellaneous Income A/c Dr

                            To Profit & Loss A/c

                (Being balance transferred to profit & loss account)

  4. For the sale value of spoilage which are identifiable with any job-

    5. Spoiled goods stock A/c                       Dr

                To Work-in-Progress A/c

  5. For the sale value of spoilage of general nature-

    6. Spoiled goods stock A/c (Sale value)                                       Dr
               
    Factory Overhead Control A/c (loss due to spoilage)             Dr

                To Work-in-Progress A/c

  6. For valuation of additional materials & wages which are required for correction of defectives identifiable with any job-

    7. Work-in-Progress A/c              Dr

                To Materials control A/c

                To Wages control A/c

  7. For valuation of additional materials & wages which are required for correction of defectives but are not identifiable with any job-

Factory Overhead Control A/c                       Dr

To Materials control A/c

            To Wages control A/c

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