 In this discussion, we will discuss the discussion question of Describe how materials flow in a process cost system and how to account for them So if we see a discussion question or essay question like this We may first want to take a look at the key terms here the key terms being materials We're looking at the material flow and we're looking at a process cost system So we want to see a process cost system. We may first want to define that then what is a process cost system? How do the materials then relate to the process cost system? If we're looking at an area where we're just concentrated in on the process cost system like here Then that might seem somewhat obvious But if you're looking at a more broad type of topic where you're covering, you know A lot of different type of topics then of course it might be the first thing you want to start with is saying Okay, we're talking about a process cost system Let's define what a process cost system is because we need to basically have a foundation there Before we'll talk about the materials that will then flow through that process cost system And you might pick up a few points just by putting that down first so note that the process cost system is one of the two major types of Systems that manufacturing type companies will use will typically compare and contrast the process cost system with a job cost system so we hear flowing through or thinking about a Process cost system and now we're considering the materials so we might want to list out Well, what does it mean to be materials with relation to a process cost system? The process cost system is tracking inventory Through the process to get to ending inventory that we will then sell inventory typically consists of Materials raw materials and it is going to consist of labor and overhead We hear of course concentrating on the raw materials So what happens with the raw materials and then we can go through the process of you know How does the raw materials go through we can list out the actual journal entries if we need to do so? Typically first off we would purchase the raw materials that we're going to use for inventory We're typically talking about those materials used for inventory. We wouldn't normally Debit the raw materials which would be a type of inventory account typically and credit accounts payable or a cash if we bought it There's going to be direct materials There might be indirect materials as well and we might track the indirect materials in a separate account if we choose to So if we bought indirect materials those that aren't used or can't be tracked directly to the process then we might debit Indirect materials and and credit Accounts payable as well when we purchase the indirect materials and then typically we're going we're going to go through the process and start the Process of our inventory start converting the materials to the work in process Normally we'll take the materials then and we'll take them out of the materials and we'll put them into the work in process and Start to work on them and from the accounting standpoint that would be reducing the materials account an asset We would credit it reducing it and then we would debit the other inventory account, which would be work in process So now we've taken the materials we've put it into work in process If we have any indirect materials and we track those separately, we might do the same thing We might debit work in process or debit I'm sorry overhead in that case to put it in the overhead and then credit the work in process account So then we'd have the materials and then typically the materials would flow through if there's more than one process Then of course it would flow through to the second process Once completed so we'd have the units that would have flown through to from the one work in process account And then if they go through another process They would go to the other process process to would be debited for the amount that had been completed the work in process from one and Then work in process from the first account would be credited and the materials would then flow through To the second process and then of course they would flow through finally to finish goods at some point So we would credit the work in process and debit finished goods, which would be the inventory So then they would be in inventory and then at some point We would finally sell the inventory and the finished goods would be included in that Indian inventory notice As we go through the work in process. We would also we're tracking. We're thinking about the materials, but they would also be Labor and overhead that would be applied out and then once we sell it It would then be leaving finished goods inventory with a credit and debiting Cost of goods sold when it's actually sold along with the sales journal entry Which would be a credit the sales and a debit to accounts receivable or cash