POC entries

what will be the entries with clear impact in WIP and COGS
Replies (5)
Quick Summary
This discussion clarifies the accounting entries for tracking Purchase Order Costs (POC), focusing on their impact on Work in Progress (WIP) and Cost of Goods Sold (COGS). It outlines the flow of transactions from raw material purchases through WIP to finished goods and finally to COGS, explaining how inventory adjustments affect these accounts.

To tell the truth, there are many ledgers like expenses, COGS, payables, Inventory, Purchases, Sales etc, and lots of entries for this. Sometimes if a company has subsidiaries, they use control accounts as well. If you follow cost accountants material, in that, apart from branch entries, most of the control account entries can be used to perfectly represent transactions related to COGS and WIP   

If we consider a normal transaction, how the entry will flow to RM ,WIP, COGS and FG

ok, first purchsed raw matrial

Purchases a/c

To Creditor a/c

then raw material is debited to inventory a/c and from there taken to WIP again. 

WIP a/c

To Raw material Inventory a/c

once production is complete and WIP is transfered to Finished goods a/c

By Finished Goods a/c

By Closing WIP a/c

To WIP a/c

closing WIP is added to closing inventory again and this will be again used in the next periods WIP. (Closing WIP is unprocessed WIP)

Then to offset purchases with finished goods in COGS a/c

By COS a/c 

To Inventory a/c 

here COGS will reduce to closing inventory.

 

Thanks

No problem. By the way I meant purchases set off with ending inventOry because it holds WIP as well.

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