 What we've done so far throughout the period is we're recording the costs related to the inventory into the work and process account and then we transfer them to the finished goods once they're completed. In other words we're recording the information into the work and process account as they happen, as the costs happen. The ones that we can assign directly to work and process that including the direct materials and direct labor then we include in work and process. We can include them directly only if we can assign them to particular jobs. So direct materials and direct labor are items that we can assign to jobs such as job 15, job 16, job 17, job 18. The stuff that we could not assign directly to the jobs we had to put into factory overhead then use an allocation base to assign it to the job. So each job then does have factory overhead but we had to use an estimate in order to apply out this factory overhead. So now we got to consider are these jobs open? Are they closed or have they been sold? There's really only three things that can happen to these job cost sheets. They could either be a job that we're still working on in which case I'm going to call it open it's still being worked on or it's been closed or finished whatever we want to call it I'm going to say closed then it's going to be a job that should be included not in work and process but in finished goods and then once we sell it I'm going to say it's going to be shipped at that point so that's when it's going to be shipped or done or completed it's not only done in terms of the finished goods is done but it's done in terms of it's gone we shipped it it's it's left and therefore should be recorded in cost of good sold. Now notice what we're not focusing in here I'm not focusing on the sale because the sale is going to be recorded at that final point when we ship it but that sales price doesn't have anything to do directly with these numbers on the cost sheets that we're directing but the cost of good sold does so we'll talk more about that when we record the journal entry right now just note that this current job sheet is supporting work and process finished goods before we record this shipment meaning it's it still has these two in finished goods so if we if we look at the supporting documentation for the job cost sheets we're going to say that these three add up to if I add up this three thousand eight twenty the two nine the two seven nine zero and the two one two six we're going to say that three eight two zero plus the two seven nine zero plus the two one two six adds up to the eight seven three six that's still in finished goods inventory our goal now is going to be to ship these two out and move them from finished goods they got to go out of finished goods because we don't have them anymore and they're going to move to cost of good sold that journal entry then is going to be four these two jobs three eight two zero plus the two seven nine zero or six hundred uh six thousand six hundred and ten that we're going to reduce the finished goods by leaving just the one finished good job two thousand one twenty six and moving this six thousand six ten to an income statement account a temporary account one that will close out at the end of the time period to retained earnings of cost of goods sold the two jobs that are still open that are still in work in process here are these green jobs that's going to be the two thousand twenty four and the two thousand three ninety so the two thousand three ninety and the two two four add up to the four thousand four hundred and fourteen which are still in work in process so these job cost sheets can then support the work in process and the finished goods they will in essence support the cost of good sold to a degree but remember that these are temporary accounts that will close out to retained earnings so as we go through time as we go through years we're going to have a whole lot of closed jobs that have been closed and shipped hopefully because we're going to be doing this for a long period of time the cost of good sold number is going to always close out to retained earnings so we can't really tie it out in the same way the same fashion as we can tie out to the finished goods and the work in process accounts so just keep that in mind note that we are looking at it kind of a simplified job cost sheets here the job cost sheet that we've looked at as an example is more detailed here we had the direct materials direct labor and overhead the three components which will always be in the job cost sheet this showing more information as we go including the requisition forms and the date of the direct material requisitions as well as the time tickets and the date of the time tickets being allocated to this particular job so this is just an example of one job that could be more detailed than we're kind of summing this up a direct materials direct labor and overhead so just keep that in mind as we go the job cost sheets might look different they could be very detailed we could have a simplified format of them different companies will have different job cost sheets it'll depend on what type of of work we're doing but they will all typically have if we're making stuff direct materials labor and overhead and if we're not making stuff then we're basically typically going to have the labor we're probably charging for hours and we could still have the overhead that we're going to allocate out okay so then if we then take a look at the journal entry it's a little bit more tricky for the sales journal entry because what we're doing now is saying these jobs have been shipped so we know that the finished goods inventory needs to go down because we no longer have these items and we have to tie out the job cost sheet here and the other side is a little bit more tricky we might say well what should the other side be and you might be tempted to say well it should be sales because that's what that's what happened we made a sale but and we have to go back to that merchandising journal entry to figure this out and when you think of a merchandising company or any company that sells merchandise and it's a perpetual system there's two things we can think of them as two journal entries they happen at the same time we could record them as one journal entry but it's useful to think of them as two journal entries that happen at the same time happen simultaneously in a perpetual system when we make a sale one is that we credit sales increasing sales and we debit if it's an invoice uh accounts receivable or if we get the cash at that point cash so that's going to be one component now based on what we have here we don't know the number yet of that uh we only know what the journal entry is going to be because all we're tracking here is the cost what we're tracking here is the other side which is to decrease the finished goods inventory and record the related expense of cost of goods sold that's what we know so far we know that this is going to be cost of goods sold but cost of goods sold