247 Work In Process - Labor
Assets
Inventories
Synopsis
Account 247 is established to record the amount of Work In Process, which is defined as the compensation of Mechanical and Body Shop technicians, but not yet sold to customers.
Debits |
Credits |
|
|
Example 1
Record a mechanical shop technician’s compensation of $1,722, including holiday and vacation pay and Employer contribution of $122.
Journal: Payroll
Entry: |
|
Debit |
Credit |
Account 247A |
Inventory – Work in Process – Mechanical |
$800 |
|
Account 024-05 |
Absentee Compensation – Mechanical |
$800 |
|
Account 025-05 |
Taxes – Payroll – Mechanical Department |
$122 |
|
Account 321 |
Salaries, Wages & Commissions Payable |
|
$1,178 |
Account 323 |
Payroll Taxes Payable |
|
$544 |
Example 2
Record a customer cash sale of $310 for mechanical repairs on a service customer’s vehicle. The customer mechanical labor sale is $170, the sale of shop supplies is $5, and the sale of parts mechanical repair orders is $120. The cost of customer mechanical labor sales is $50. The cost of shop supplies is $4 and the cost of mechanical parts is $85.
Journal: Service Sales - Cash
Entry: |
|
Debit |
Credit |
Account 225 |
Cash Sales |
$310 |
|
Account 660A |
Cost of Sales – Customer Labor – Cars & Light Duty Trucks |
$50 |
|
Account 669 |
Cost of Sales – Shop Supplies |
$4 |
|
Account 667 |
Cost of Sales – Parts – Mechanical Repair Orders Cars & Light Duty Trucks |
$85 |
|
Account 460A |
Sales – Customer Labor – Cars & Light Duty Trucks |
|
$170 |
Account 469 |
Sales – Shop Supplies |
|
$5 |
Account 467 |
Sales – Parts – Mechanical Repair Orders Cars & Light Duty Trucks |
|
$120 |
Account 247A |
Inventory – Work in Process – Mechanical |
|
$50 |
Account 242 |
Inventory – Parts & Accessories |
|
$85 |
Account 242 |
Inventory – Parts & Accessories |
|
$4 |
Account 324 |
Sales Taxes Payable |
|
$15 |
Example 3
Record the $675 monthly adjustment to agree with the schedule of the cost of labor sales on mechanical repair order in process.
Journal: General Journal
Entry: |
|
Debit |
Credit |
Account 665 |
Adjustment – Cost of Labor Sales – Mechanical |
$675 |
|
Account 247A |
Inventory – Work in Process – Mechanical |
|
$675 |
Comments
A debit balance represents the cost of labor on repair orders in process.
Note:
1. This compensation SHOULD NOT include absentee compensation such as holiday, vacation, sick leave and pay while attending training schools.
2. Separate general ledger accounts should be established for the cost of mechanical and body shop labor on repair orders in process.
3. Month-end Open Repair Orders should be reconciled to the General Ledger Work in Process inventory values for Mechanical and Body Shop.
4. Sub-accounts should be created to separate Work in Process between Mechanical and Body Shop technicians. Also, if non-productive personnel (i.e. Service Advisors, Managers, Porters) perform “Labor”, then a separate sub-account is advisable