 You know maintenance and all that kind of stuff of the factory then That type of thing we can't apply to a specific job as well necessarily and therefore We're gonna put it just into this big bucket of overhead and apply it out to the jobs based on the predetermined rate First a word from our sponsor Well, actually these are just items that we picked from the YouTube shopping affiliate program But that's actually good for you because these aren't things that were just given to us from some large Corporation, which we don't even use in exchange for us selling them to you These are things that we actually researched purchase and use ourselves Acer 27 inch monitor I've been using an Acer monitor as my primary monitor for a few years now This is the first Acer monitor that I have used after having used a series of different brands of monitors in the past The Acer monitor has been performing well, and I'm trusting the Acer brand more and more as I use the monitor I have a 27 inch monitor, which I think is ideal for what I do which is of course the screen recording and The editing if you would like a commercial free experience consider subscribing to our website at accounting Instruction comm or accounting instruction dot think of it comm Where we have many different courses you can purchase one at a time or have a Subscription model given you access to all the courses courses, which are well organized have other resources like excel files and PDF files to download and no commercials So that's what's happening here once again we're basically paying payroll and you might have in your head well we should be debiting payroll expense when that happens and We're not debiting payroll expense because the people who did work Have not helped us generate revenue yet They helped us generate the asset of inventory and more specifically we're gonna put it into the factory overhead So we're gonna put it into factory overhead. It's already been applied out in this problem to work in process That's what we have a credit balance here So we're gonna debit factory overhead, which has already basically been applied out So we're gonna copy the factory overhead. We're gonna put it in C16 right-click and paste it one two three All right, so we're gonna make this a bit smaller. I'm gonna scroll down to 80 I'm gonna scroll over here a bit so we can see more of our general ledger Here's the factory overhead that we're gonna post it to here's where the factory overhead It's that's almost the third to last asset. So here's the factory overhead on the That's not factory factory overheads down here. Here's factory overhead on the general ledger in U-26 So you 26 equals we're gonna point to that 14,000 And so you could see a little bit more of that and enter and now the that we basically have over applied it at this case Now it's back to 98. What's happening here is it looks like we've applied out way more to do job Then the cost that we have had yet But that could happen because what we haven't yet got through the month yet So we've applied it out before we actually incurred the cost in this case. Okay, so then we're going to go To the second half, which is cash. So here's cash. Here's cash on the trial balance Here's cash on the general ledger. We are in the credit side. So we are in our We are in our 10 equals point to that 14 that's gonna bring cash down and Put us back in balance. Notice that we posted to the factory overhead We do not need to do anything with the job cost sheet in that case Because we don't do anything with a job cost sheet until we allocate it from factory overhead to the work in process Which we had already done for overhead, which is that 109 Are you gonna make this larger again make back up to a hundred percent on the taskbar? Scrolling back over to the left. We are now on 130 Which says that amounts apply to factory overhead So here's all the other stuff that basically is we're paying for But we don't know which job to post it to We're gonna take this one item at a time. So the first one is indirect materials. So indirect materials are is cash affected No, all we're doing is transferring the raw materials To in this case not work in process, but to overhead reason being these are gonna be Materials that we couldn't apply directly to a job such as like glue or something like that Or if it was grout in a construction job things that it would be too tedious for us to try to apply that out to the job Even though we do want to We would be too tedious to apply it out directly to the job I don't know how much glue we used to make the job because we didn't count the glue because it would take too much time And money to do so so we're just gonna dump it into The overhead account and then apply it out using the predetermined rate So this account's gonna go down the raw materials. It has a debit balance We're gonna make it go down with a credit. So I'm gonna copy that I'm gonna put it in the credit by going under the date Right-click and paste one two three Also note that some problems might have two raw material accounts meaning one for direct raw materials one for indirect raw materials Some may not so just be careful on depends on what type of problem you're looking at and that's gonna be a Credit of 30,000 Then we're gonna debit something for 30,000 and all the debits for these ones are gonna go into the Factory overhead. So these are the things that we couldn't apply to the job factory overhead is overdrawn right now So it's really kind of an asset that you should it should have a debit balance until we apply it out But we've already applied it out. That's why it has a credit balance. So we're gonna copy the factory overhead We're gonna put that on top right-click and paste one two three Okay, let's make it a bit smaller and post it out and do these one at a time So we're gonna post this to the general ledger. I'm gonna scroll over a bit so we can see more of the information So we're gonna post the factory overhead, which is here Here's factory overhead on the trial balance and factory overhead on the general ledger So we're gonna debit factory overhead in that you 27 so you 27 equals I'm gonna point to the debit of 30,000 bringing the balance Back towards the debit. So it's a credit. It's going it's going towards the debit of 65. It's still overdrawn We got the raw materials here. So here's the raw materials on the journal entry Here's the raw materials on the trial balance third account Here's the raw materials on the general ledger and we are in Q 25 equals We're gonna point to that. I'm in the wrong side here should be in the credit side I mean our 25 Equals we're gonna point to that 30,000. This is a debit. That's a credit. Those are opposites This will go down puts us back in balance over here. We're gonna make this larger again Scroll over and see what we have next So we've got factory utilities Okay, I'm gonna assume we paid the utilities with cash So and again some problems will try to say that we didn't pay with cash We got a utilities payable, but I'm just gonna say and the reason they do that is because They want to show you in the journal entry that it's for utilities and you can't see that if we paid cash So let me show you what I'm talking about there But in this problem, I'm gonna assume we paid cash. So cash for utilities cash as a debit We're gonna make it go down by doing the opposite thing to it which in this case is a credit So I'm gonna copy the cash I'm gonna skip a line and I'm gonna skip another line to put it on the bottom credit's gonna go on the bottom and The credit is gonna be for that 12,000. I'm gonna represent the credit with a negative 12 Thousand we're gonna debit something for 12,000 And and again a lot of people are gonna say well utilities I should debit utilities expense if we pay for utilities, but remember that The utilities expenses on the warehouse in this case are in the factory Therefore it needs to go into the asset, but we don't know which job to apply it to so we can't put it into work and process Therefore we're gonna put it into the factory overhead. So I'm gonna copy the factory overhead That's gonna be the debit right click in See 22 paste it one two three then I'm gonna make this small again Or smaller down to 80 on the taskbar. We're gonna scroll over. We're gonna post factory overhead again So here's factory overhead here. It is on the trial balance and here it is on the general ledger We are in you 28 equals gonna point to that 12,000 and once again, we're we're less overdrawn here now because we already applied it out at the 109 So now we're at the cash. So here's the cash. Here's the cash on the trial balance. Here's the cash on the general ledger We're gonna post it in Q Q11 equals and we're gonna point to that 12,000 and enter All right, so we have that one. I'm gonna make it larger again back up to 100 Scroll back over and we're out of room. Therefore. We're gonna have to unhide over here So remember we hit some cells at the beginning where we have a b c d FL and you know, there's some hidden cells there. So we're gonna highlight I'm gonna put my cursor on E so we can see the drop down left click drag over to L let go right click on the selected area and Unhide so we're gonna unhide those cells So there we have those then we could hide these cells now I don't need these cells so we could hide b to f now and they'll still be there do not delete them But we're just gonna hide them. I'm gonna put my cursor and be scroll over to f Let go right click on selected area and hide Okay, so we had just recorded the utilities now we're gonna record the factory rent So what's gonna? I'm gonna assume that we paid the rent with cash or a check therefore is cash affected Yeah, we're gonna say cash is gonna go down And so there's cash has a debit balance and we're gonna make it go down by doing the opposite thing to it so I'm gonna copy it and I'm gonna put that on the bottom right click and paste one two three the amount's gonna be for 20,000 negative 20,000 cash paid We're gonna debit something for 20 and again you might be saying well we should debit rent expense and Again, we paid the rent but it's on the factory so that the factory rent was not yet used to help generate revenue Therefore it can't be an expense under the matching principle It needs to be included in the asset and Expense when the asset is sold because that is when it's used to generate revenue So we're gonna put it into factory overhead because we don't know which job to apply the rent to Therefore we're gonna put it in the factory overhead. So we're gonna copy factory overhead and paste it one two three Now I just want I was gonna point this out Notice that if you were to look at this journal entry You couldn't tell that this was paid for rent and if you know if it was a prior problem We saw rent expense. We would say oh well rented that means it's paid for rent But what if we dump it into factory overhead? We can't tell that that's what that's why a lot of problems will actually say We didn't yet pay the rent, but we put we you know We incurred rent then it would go into rent payable and Part of the part of the good thing about that type of problem is that you can see the rent payable tells you that the journal entry is for rent, but It also is kind of confusing because we haven't you know, usually we pay the rent with cash So I just keep that in mind if you see some problems that have a lot of payables in it when you start working with the factory overhead That's because they're trying to make the journal entry show you What the journal entry is for even though you can't really see it in the journal entry unless you had a description of it All right, so we're gonna post this out. I'm gonna make this a little bit smaller and Then you're gonna scroll over here a tad and then so here's the factory overhead Here's the factory overhead on the trial balance. Here's the factory overhead on the general ledger We are scrolling down to you 29 Equals I'm gonna scroll up a little bit. I know I'm way down there And there's that 20 and enter and we can see that once again, we're still overdrawn but now we're overdrawn by 333 and Or overapplied I should say and then we are over here on the cash So here's the cash. Here's cash on the trial balance. Here's cash on the GL. We're on the credit side in our 12 equals We're gonna point to that 20,000 that's gonna bring the cash count down and put us back in balance Okay, let's bring it up a little bit back to the task bar back up to a hundred percent. We are now on We just did the 20 we're now on the last one of these Depreciation on the factory. All right, so we know what our depreciation journal tree is We usually debit depreciation expense and credit accumulated depreciation. However Once again We're not gonna debit the expense. Why because when we depreciated this we used that times of Use on the equipment to help generate an asset not revenue So the depreciation was not used to generate revenue Therefore it cannot be an expense under the matching principle which is an accrual principle It should be included as part of the assets that asset being part of inventory We don't know which job to post it to therefore. We're gonna put it into factory overhead rather than work in process So factory overhead. We're gonna copy that that's gonna be another debit once again the factory overhead And we're gonna credit the accumulated depreciation just like we would if it was a normal a depreciation Transaction, so I'm gonna copy That and paste it here Why because once again the buildings on at this amount and we're gonna increase the contra asset Which will decrease the book value from in this case the 357 down by 30,000 so we're gonna have the 30,000 debit and 30,000 credit. All right, I'm gonna make this a bit smaller back down to 80 percent We're gonna scroll over here a tad. Here's the factory overhead on the journal entry. Here's the factory over Here's the factory overhead on the trial balance. Here's the factory overhead on the general ledger So notice all this stuff this bucket of stuff We're dumping in the factory overhead because we don't know where job to put it into we've already applied it out But now we have the actual costs and expenses that we are putting in here equals We're gonna point to that 30,000 and enter So now we're only overdrawn by three. So our estimate was pretty good. We estimated 109 and We're off by three thousand in this case. So that's not too bad. And then we're on at the accumulated depreciation Here it is on the trial balance and it's our last asset over here on the general ledger as well So we are in z14 equals and we're gonna point to that 30,000 and Enter and and no, there's nothing unusual about that side. Remember that that's related to the equipment So the that means the accumulated appreciation went up book value then went down because the book value is this minus this debit minus the credit 327 327,000 is how much the asset is on the books for at this time We're gonna make this large again on the taskbar We're gonna scroll over to the left and we're finally done with that overhead stuff We're going to go down to the trans transfer of jobs from work in process to finished goods. So At this point in time, we have a working process here It's backed up by the job cost sheets the working process by definition means that the work is in Process and not yet completed and at some point it will be completed Hopefully and therefore it will then be transferred from uncompleted working process to Completed work in process and in this case we are transferring jobs 14 and 15 congratulations We have completed those jobs. We're gonna transfer the amounts in those jobs to Finished goods. So that is gonna happen on 131 so 131 What's gonna happen is finished goods is going to go up and working process is going to go down We're gonna have to look at the job sheets to see how much buy because whatever in the job sheets That's what it's gonna be the amounts that we're gonna use So we're gonna have the finished goods gonna be debited though because it's an asset that's going up Right-click paste it one two three the working process is gonna go down. It's an asset with a debit balance We're gonna make it go down by doing the opposite thing to it Which in this case is a credit and then the question is well, how much and if we scroll down here We're looking for job 14 and job 15 So we're gonna scroll over all the way over to our job sheets over here