Journal entry in Job order costing system

When material is issued, its cost is released from Raw Material Inventory, and if direct to the job, is sent to Work in Process Inventory. If the Raw Material Inventory account also contains indirect material, the costs of these issuances are assigned to Manufacturing Overhead. Thus, the journal entry will be as follows:

Work in Process Inventory (if direct) XXX

Manufacturing Overhead (if indirect) XXX

Raw Material Inventory                                     XXX



When the first direct material associated with a job is issued to production, that job moves to the second stage of its production cycle—being in process. When a job enters this stage, cost accumulation must begin using the primary accounting document in a job order system—the job order cost sheet (or job cost record).