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When we begin a work order we will transfer materials to that Work Order. Note that the location being transferred into would normally be a WIP asset account. In this case we are assuming that Revenue Recognition is not required during the Job. This is typical of companies who manufacture finished goods for sale and where a work order requires less than one month completing. In this case we will ultimately complete the work order and transfer dollars from WIP to Finished Goods. When the finished goods are shipped to a customer we will transfer dollars to COGS in OE day end processing.
Transfer raw materials to WIP. This can be done one item at a time or by transferring a complete bill of materials created for the estimate or the work order. It can be also be done continually throughout the life of the work order. This is done through either the Work Order or Item transfer form.
Debit (WIP):
GL WIP Account (Category of Finished Good Item) $10
Credit (Raw Material)
GL IC Account Child Item 1 (Category of Child Item 1) $7
GL IC Account Child Item 2 (Category of Child Item 2) $3
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