 in this presentation we will enter a journal entry to record finished jobs moving those finished jobs from the work in process account to the finished jobs inventory finished goods inventory account 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 dot com or accounting instruction dot think of it dot com 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 recall what we have done so far is record the processing and the production of our inventory most of that happening in the account called work in process that work in process account this one number in work in process being supported by jobs so this one number needs to be supported in a similar way as the accounts receivable the accounts receivable having a gl account by date but also needing a subsidiary account by customer to know who owes us money the working process also has a gl account by date but we also need to know this working process by job so as we recorded costs that are going to be applied to inventory we either applied them to the work in process directly if we knew which job it was going to such as the direct materials and the direct labor or we had to allocate it to the jobs after first recording it into the bucket of overhead then using a predetermined overhead rate to allocate the overhead to the actual jobs what we're showing here is going to be a bit of a condensed job cost sheet so we have like these a condensed job cost sheets job b15 b16 b17s have here b18 and b19 they all have the three major components we've got the direct materials direct labor and factory overhead and if we add those up these three components for each job we will get to the totals here the total for each job so this is the cost of each job as we go that this is the cost so far now when all those jobs are open then as they have been so far we're going to say that they're all in working process we don't have anything in finished goods so far and so all of these jobs at the start of here we're open jobs they're all going to be comprised of or put together to come up to the 13 150 in other words if we add up these jobs we're going to say the total job cost is 3820 plus 2790 which is this item plus 2024 plus job b17 which is 2126 and job b18 which is 2390 that's going to give us our 13 150 so that's the case when they're all open now there's three basic ways a job can be it could be open and we're still working on it which means it's going to be in work and process or it can be closed because we're done with it so i'm going to call that a closed job a finished job a completed job however we want to phrase that we're going to say it's completed and therefore it needs to move from the open job to the completed jobs and we're going to say that these three in blue here are those that have moved we're going to say they still have a job cost sheet the job cost sheet looks much the same but it's done we're no longer working on it we're no longer adding more material labor and overhead costs to it because it has been completed whereas these two jobs b18 and b19 are still open so what we need to do then is make a journal entry for that transaction to move this to here the journal entry is pretty straightforward because these are two inventory accounts we just need to move this to here but we need to be able to support that by the job sheets and that's what that's what gets a little bit tricky because we're going to be using these job sheets to to back up and support both the work and process and the finished goods so the journal entry according to the numbers we have here we're going to say okay these three blue jobs we're going to move so that's going to be the 3820 plus the 2126 plus the 2790 so that's going to be these three items here and we're going to move those out and we're going to put those into finished goods so let's do that now with a journal entry before we do however just want to remind us of what the full job cost sheets that we've been looking at have looked like so we're kind of simplifying these job cost sheets here to give us a simple worksheet to work with job cost sheet that we have been looking at might be more detailed depending on what types of job cost systems we're running but they have the three components direct materials direct labor and overhead and again we might be applying that direct labor out with the requisition forms and the time tickets and a time and tying that information out but in essence of course we're going to end up with total direct materials total direct labor and overhead those being our jobs and then we're going to pick those jobs as we did here see we only have basically the totals in this little worksheet we'll take the totals here pick the jobs that are open the jobs that as they close and allocate them out in this process so here we've done this we're going to we're going to say remember that our amount is 8745 for these three blue jobs that we're going to move out and then the journal entry is pretty straightforward we're just going to take them out of work and process this is a debit balance account we need to make it go down and therefore we'll do the opposite thing to it a credit and we're going to put it into the finished goods inventory this is also another inventory which is an asset balance account it needs to go up so we're going to do the same thing to it as it's normal balance which is a debit so we're going to go ahead and debit the finished goods inventory for that 8736 the sum of these three jobs and then we're going to credit the working process for that 878736 just moving that number from here to here again the difficult part being us making sure that we have the correct supporting documentation with the jobs to support both the working process now and the finished goods accounts so we're going to post this now to the general ledger so here's our finished goods we're going to post this out it's going to go from zero up by 8736 to 8736 that then is found here in our trial balance so here's our ending trial balance so far and then we have our working process we're going to credit it so it was at 13150 we're going to credit it by that 8736 moving it out and down to 4000 for 114 and that of course is the amount we see here on the trial balance so now we just broke this number up between in essence those two breaking out the ones that are finished goods based on the jobs that had now been completed so if we look at our end products now we see the job cost system is now supporting these two numbers and just to verify that we said that the blue numbers are now the finished jobs which once again is the 3820 plus the 2790 plus the 2126 that's going to be this number this number and this number adds up to this 8736 and the jobs that still remain open then are also supported by these two numbers 2390 and the 2024 so that's going to be these two open jobs and that's going to be represented by the working process account here so now both of these accounts are being supported by our job cost sheets the next step of course is that we're going to sell some of these and that step will be similar to a merchandising company in that we'll finally have these finished goods inventory you can think of these jobs as basically finished goods like inventory this is the cost of them now in finished goods and we can just when we sell them have the normal journal entry and we'll see that next time just to note however when we do sell it we often forget about and get confused in the sales half of the journal entry in the cost of goods sold because we've been focusing so much on the cost that we're we're actually focusing in when we sell it on the cost of goods sold component the sales component everything we're tracking here has nothing to do with sales yet we may use the job cost sheet for sales but these job cost sheets don't have anything to do with sales and and therefore they're they're not related directly so in other words we may for example use our job cost sheet as our construction of our invoice and say our invoice look we had this much in direct materials this much in direct labor this much in overhead and we may tell our customers that we have a like a 30 or 40 markup and say that the sales price then would be two three nine zero two three nine zero times a 30 markup point three plus the two three nine zero and charge then three thousand one oh seven that's one way we could construct the invoice but it doesn't necessarily have to be constructed that way and when we do the journal entry there's two sides to it there's going to be debiting accounts receivable or cash and crediting sales that side having nothing to do directly with these numbers and the other side being debiting cost of goods sold crediting the inventory in our case finished goods inventory that that journal entry should look familiar if you've worked with merchandising companies but again since we haven't been looking at that journal entry the whole time and have only been focusing in on cost and not revenue side of things we can get confused on that journal entry so that's what we'll do next time