665 Adjustment – Cost of Labor Sales - Mechanical
Cost of Sales
Fixed Operations
Cost of Sales Synopsis
Account 665 is established to record the amount of adjustment required to reconcile Work in Process to the actual amount of labor on open repair orders.
Debits |
Credits |
|
|
Example 1
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 |
Note:
1. This adjustment represents the cost of mechanical technicians’ compensation for productive time, which was not applied on repair orders.
2. This account should not include wages paid to technicians for holiday, sick, vacation, or other time off. Those hours should be charged as a salary expense.