luaulsn[pe -

'pps aq ot aw!t-u!=lsn{ pd?aldutoc a.rc spoo? paus't'uq puD ',1to't\?npord JOJ auloJui a-a
'f,renueg Eurr
ul asn rol ault-u?-Xsn{ panla)al a"tD s?D?Ja?Dtu mDJ 'StntnTcotnltollt
JIf rapup 'pannba.t arD ,Caqy aun? aU? ?D ,C1?coxa pua 'fiyryonb q8ttl
to 'sTcnpotd yqfr1L .nil ainpdld o7 paTocrpap s! Sttrtr4eotnL$)u au1?-u't-?snf 'ooo'zd'tut
'000'i
's ulJn?)Djn u u ttt aa'ts'lDlXa lo dn P l !, r\
a'tJ ol'tt ao'tt t d
a'il? lr't sUnsar ua$o tr.,rlosaytrld *tqJ 'paalaJal?rD sJapro Jaurc?sn) UsnJ pltD
pagcadxaun asoo-ur,1stl{ patoTs ptn payaTduoo a"tD spooE paUs'tlrq 'aqlJls
aurqeEur PJlaI
s,aatoydrua Kq umop TrLF s't nqddns frat1o "to figtyonb "tood Jo srua1L aurcs asDJ
-u7-1sn{ [)ar.t1a1vtDtu arD slr,1.o?Dut mot to salJo?'u?a1)I :fiqdosoTrqd asoc-ut
-1sn[ o-tro'pasoq lnaq sDU ssacotd Strttn7cotnual"Lt srrcnl]'t?uoc '[77auot?!pota 'JnoL{ ra(
.LL
ay!
uo?pnpotd aq? ut days 4x.au 'op4.red 61'1
ayt tq'pa'paau so i1a7otpaluiln paonpold sr auy uolenTsotd D :!.! feuo!_ylo,
q)Da rp'tLlin ut ura1sts ttorTcnpo,td o st Euttmycotttttr:ru (Ufl au4-lt1.-?cnf :I
'.f,.renuep Euu
:
00'€ud
00'zI
tualsAs SulrnlssJnuury 00'q
00'8 d
ourlJ,-uJ-lsnf
:s-[ol
sBAr ss 13np€
Burlunocae ti
gT ratdtrry7 'aurocul o,

iTliA;tt)

I
 ;

"u*fu,r {

mMU
i

OBTTCTIVES OF JIT MANUFACTURING

The primary objective-of JIT manufacturing svstem is tci''qi1i-*"=lT* -6ryry1
totaily eliminates aII manufactgling -Lir)'.q+:-o-i'ies. Inile-nisfTgs-Ere
to have an"bdu3iise efleil"on nbt income because thev tie up
"oU*ae"ud
fund.s and storage space thal could be madg-available-fbr nlore
productive .v
p""po.ur. JIT manufacturing systems €1rrt^to simultaneously (& meet t
i.r"lo*". demand in a timeiy way, 12) p'it6 high-quality products' and (3)
atthe lowest Possible totil cost.
FEATURES OF JIT MANUF'ACTURING
JIT manufacturi.ng systerns to be effective should hal'e the following
features:

The cornpan5r must have dependahle suppliers n'ho are rviiiing to

of thw ma.uerials according
J"fiW. o., sho*t notice eiicT qilantitiits-including
l" .i-"ct-" quaiitv muliiple celiverie s
-Suppters must also i:e v7illiv1g to deliver the
=FaqiEffii"16:Pq6fr
;ithlh ttre saia'aai)
*.t"riaIs at #ecifiel dcpartment rather than at a centtal
".*:
repeiYinB dePartment.
Aiero.,pine of ,U the different types of equipment. useC, to i:aake a
giv"6n piodirct should be ffffifuwiats'riibve.frcrn one mactrine to
inother, and various operations are performed in sequence' NlateriaLs-
tl4EgElgjg-s! p'- are--miniuri-ze d'
- A mul[i-skilled. work force must.be.d.evelope+. Under JIT system,
may have the respc,risibitity'.to operaie and'maintain
' ""i*"rf.-r
severai different types of machines.
ontrotrs}'siem must be applied throughout the
reration-S; To1at quality conti:ol ni.eans no defect.
!;:

urrng operaflons.
since only-reqirired quantities are pro<iuced i-rnder the puli-t1:r+ugh
approach, any defecti at any department wlil shur do",t'n operations
at subsequent dePartments.
The time geg=Wed to get equiprnont, to01s, and rnaicrlais ready to
stait ti.e pr]dilUo, of.a produci (set-up time) shoultl l:e redeice" The tb&{
time fiom when an order is receive until it becomes a finished prc'duct mluqr{
i*"""r*.turing lead tirne) should likewise be red.uced" Reducing ed
setup time rpafes production in srpaller batches economical, which tlsrF'O
in turn redgces the inventory 1eve13. Eeducing rnans-f.aqtgf1jg 19ad
time enables a company to respond faster to ehanges in eustomer
demand.
 raulclsno lir s
pe$i-HfiinJae
.r{ro;sds Eurtrunoa*e *q? u} ap€rrr aJB sals'ius leu.rnc{ IisTEt/* ea {*' eEeqe} qc${,r& 'pcrrrc
*poo3 Fsq-sffi:SJs *it?rs 01 q! aeuri) slgualg"rr ,l,File es*q+;ati ru*ry *1*'{* aq3 Surcnpeg 'pa
ur aSuis *,ol si*g*i sfuii:a-mggifr, 'f pue I '6 *a3ess *'1 Eulpuodease**
*tr
qcnpord pe'.{sr
.sivlocf *+F;tt;f ;rtru; seq u:a+*ds Suqsea Butqaw*3 1er?r:e*hos eAsqg ei{$ ar{& 'aanpa.r a
o3 ,{pear spl

3cr.poffi $EAASJd r5t:Trs&l {€..Er4EEt suollu:ado u:

urFuplnea.r *as$"$t:
;o$li€ft qEnr:.xq;-5nd
rr0:?3I!ps.Id 6s€"{*1,Itrd
3otror*qdm+3 '?aa.T3p ou sil
oqt lnouFno.

p aFegg g *$w3g g aEuqg 1 a$agg urBlirlEui. pIr

'ura3s.{s g.Tp
:sFcss
,lJr *a5g$# -el€rJalEtr{'at
p*qsruq J$ alus at sltsr.r33Erjt ?e*;Tp-Jo aseq:r'rnrl ur*'1: *ia'to e "I&cl
l,**ili q:i"*xt-iq -*sud s4cripo.:d *a",qietsua"irbes p*q3*'r'l *IE s?r"43 "{gensil 01 auiqcErrr 3
3 a{EEI o? F'
'#'tttSsc-' tls;n;y'1'aeq sE u'H*u{ s{ arnpa}'}3(t
pagqdurts siq& 'sairCI?IrpA{r: ptle salEs 5* ?'e{u3 aq?'uaael3aq s3sm a?B-?oiIB *} I€r.?uec E 1B
pe,gqetrur* e s:ai*.is Et;*nlae3nug$r;,If 1u*'urUduie'.: Qf, aq? raAriap o
pn$*"*, ****pa}*;rf
sarJa^rlap aI(
*nI'LS#3 EISILT'frHSVA Bggp;oacv sg
?+ o1 Suqprrr a:
'
+.rr:.o5il H&**1t.r9i4-:L:r=::* .rrt-qH p'*i16*''sIE
(CIn* ss aosl i:I
a*e1d
ril pue cIBila3EI i 'po*r{ r,i,Jt:&O}nr: aUr: Si'ilc'
.*?"*?::: 3sar{t 3*
:paqru-ruu{{a ff:? slunti*ce ,$r:xtlaaut sca'}o"td ul $Jo'$ pu* s[€r;a?E]i{ 3ur,tro11o3 aq
oi 'pa?€firl$qa
'

Io n&o6 paac.rd*r 3qi Jo asc**3.l PezrtrE+l a:E sEul{ee X$c':

t{'Ji?snpo;d {
'p51ztru::1a ec Fa'lripat i];B $?sa$ +Ee:o?"- 'r"rqua*u1 ";' (g) pue 's1cn
:paaueq.ra a.r* ,{;o,rqaF ,i3tsgrj pue ,{liunb .xrtrpcltT '*- laaur .11) d1s
.pa?Burrlrq* ;o piarrpei ai* -qe:trAlla* Eu*,1ii*;nu*lq ".'ii
"ffi,"re.a-g1'iqq
aarlanpord a
da ar1 .{aq}
:aru JaI{?S '*{rcqu*'':ur J{r €lsoo aq? ;o Ea:x***i
$+U"3ueq ,*..s.pI-*919
,x{? $I ulalsis Euunllru;nu€$l JIf tiur3uaiual".Irur;* 3*cllaq 'eo{uru +qg lou JT $zmm

S T{U.LSAS S N XU ft ,i'J
-1'=S
fi :{Yg'{ d'If '€ S S't i-g i{N'Sfi
"** :u a tES WR *. DW t N' a u g-u 1' ; sa I gUaiAzqJ
fi9
6i4 Cltnpier l6

An alternaiive approaeh to sequentiai trackiirg is backflush c*stilrg.

Backfl.ush, cg,stins is a cosiing pra'cedure ti:rc,t ciiliits rect e*me *r
.ffior.i*u to
"*l*iine
rire cycleffiffi ss st raw
matei'i* ffiffEEFffiTEr-ffic
or
Llle_Lojll3l entries f'or sursequeni
sEEe used normal or stanqe4ilSg*g to #b-iE-EMin o'*der..uc itusl*o
out1hecostsiff-Tffif,i.rejournaientriesrcereomi',ted.}bs#{{die:
=*-:'fu=-r"*'
xaamtra*ino
aee f*vr us
aunt in E it ,,,nliL, ir, prr".rrio*-o
o rh irt i.a wln*,o-
r-qg e.a.Aig""@, *d e "

Actual conv'ersion costs are recorded as incurred, eimilarly as that under

the eonventiorral recording syitem. Conversicn eosis are il:*n appli.ed to
products at various trigger points. It is assumed that anyrconversiorr costs
il 6plr"d to produ*ti"*e carried forward. and ctispose& of at year-end..
The following cases wiil illustrate backflush eosting. They eliffer in rhe
number and placement of trigger poinrs.
Case I Co,se 2 Cese $
TriggerPoints Stage 1. Furchase of St*ge 1. Purchase of
raw materials - raw oaterials'

Stoge 3. Completian Stoge.?. CompleEcn

offinishgtl goods offinished gooda

Stoge 4. SaIe of Stage 4: Sale of Stage 4. Sale of

finished goods . finished goads finished goods

Inventory Materials and In Materials Inventory

Aceounts Process inventory

Finislied Goods Fiaished Goods

Inveatory

Main Features Three trigger'points T\vo triggerpoints Two triggerpoiuts

Use oieombined No Finished Goods No Materials

Materials and In Inventory accouat. Inventoryaccouot
Process inventory
account(MIP)

Take note that in all the three cases, there are no journal entries to record
rryork in process (stage 2) because JIT manufacturing leads to large
reduction in work in process.
 I

0*#'9tr| $?J?leJap 8?layD{L

@ffir ?*r*vGS srsb5l s+:erra:rl#S (q),*r+Irg

"pq.u*d aqg FlrlJElF par"Entls$ s*8o{} usE$&*JaEro;} psccaH rw

qq*#ngXu?I*33t" fuurcc.6r
0**'9#x sJsfrql
CIw'96{ ,€.sxuans$ **ai6tg-'ttg ?ltt: *W"ra1r,W {e) Earyg
rlqodraiiit
'F€ rx.xad aE? su:rmp pasa€ra*Ead srslJaBEer prGaaH :I
iE
sarroluaaui o'? FEre PIos sPooc P€

s,+irrre c? s,+B$i G4*ootr[B 01 s*;ilpaoo*d StIE]tIIherasE aqq *"tq EtrtsaoffisJ

aE{J,

'FI'ls
spoo8 p
a.rg spco8 paqsfirg aurr3 ai{1 ',iP sfirtrao +uTod ;*EBiq1 '3unG?}B '{;o3.;+;tu;
t Io alES 7
sp*CI* FaqsiTrIS o't:e.llun Jc iaSeuu.q - 6 s&?od aasFa:n ?E $+snpord o1 peqdde
e.r6 stg*s uor$raau63 '$E:i033n {{ie?uo3 s?Bs3 ticlsl-aAwel3 q p*S"reqa spcoS paq
puu p*";r:l*rE{ sB peprota* *eB {Feaq;*.{s FltB aaqei} $?ssa u*rs:aamst ;ro:ia1duo3 1

iurr*nV "(aimi q.r.n*;rce s:olxeaang ssasord

IrI ptre €IE;r*+Etrq o?-p*s;lex4c
aJE sg,6.,3 {}c*q&"p+se:4*.:nd arelpl.,raXeur r:aq-ti.s'Etsso 13xgrd sa5*1e3,

'(p a8uig) *po*ff FaqsluI3 3tl #1us p*e 'ig-*Ee'1s) spcrili g'*-uo1*q1duc'c I asq
.il agergi) sie1**q,eEss 3aarlp Ss *seq#snd 3x agatSad xaBEgs'3, i{ *sE}
'Pei'red aE1. JG P{1+ aql {Ii raigTl

3r# 313 plOs spoo; J$ lsa' G* pa?snfpE orB s3s+3 uctslaauol parEdde*aao :*
'pua-.read 1t
pa5idAu"lipua,{trtr1'atgIial6i5 n&EJ }G s*ric?{IeA:Ir-Euturn6aq 018 3'I€ #s*1{S stsos uorsra
7! a}SOQUGTSJaAU*}
or paildda r
ar!
stB"tur#+rr{ r€puri lEq} 1

tlt d
:qrun eed Pca PJ€Prlqlg
slT[m 0e6'6 plos 8?ran paq€li.qlJo rsq1rftrid ,- -+'.:::-_a.
'
s1!rm 966'91 FaJn?;Bj:n1rsIE. s$rrEl Jo "raq{tnN :.Vi*t*Cas o1
pa.:Jasii: clsos uorsJaAuc* I€$1atr/
*ilG'saT qsnl{ G: ra?
CIs0'961d ?rpsrl c0 pasetPrnd sP1aatBY{
3u+iibascas
.ro +gtrjgij
:S:::aso* qsr{i{'req aEt a+6.t3srifi-r
,t'rE.T IO SSE]
o+ pasn a{ $}8 :{uudruo3 Eut*u1ae3nilEy{ ar{aa3 roJ elcp Bur*a'ogs} aEJ, ;+ ai,aos 3m
'Er-';soa qs
N#IJ,VE.LSRTT g EAI6NflE{HHdTJ[*3''}
rar
WssW ct ,
 .ixs-ix-ltneA
616 Llhapter 16

J:i'-rstrario
o.
dr Deter$rine tlee aeuryrher of unite E?3*.&rxfa*tur*d clElriR?g tlxe -.i-s ca-<e-
peri*d. trO,{}CIO good units weee ala$uf*ctured *uring ila* p*ri*d"
rbis versic
A.
*o Coruapute the aorrnal cr s'iacdarcl c*sts p*r ti*.ished. r.ielif . I'hc arla-r!1r!i F!

sianqlnrrl cost per u.nit is P31 (Fi.S dir**t m*a't*::ials + Fl? co:lversi*n
costs). Case 2: f
:;ii- ;ri i:
D: Becord the ees[ of geods f?nished durr.ng t.]ae peri+*i,
Entryic) .Ftnis&.e,C "Goq;ds lruweri,{;ary #iS,r?$# T'di; ras;
hf.ateri{rls o.nri }ra Fr$*ess r'ni.;. f$s,ss$ sysle';" iL
App t ied Ccr:er:ersicr; llasf s jg{i.##s -:a=e ih',
Fi:xehed gcods (1S,SS0 unite x P31) '?a,t;T
-- -=:rrr
H
: -
Ag:plied Conversi.ou Costs (1"fi,S00 units x ff1'2]
il l;s:ra ll
This fifth proeedurs give-e baekfiush costiyig its mard*r. Flcte ti:ac i-'*;;is +^ ?-' =-
_ e-J bi
have not been recorded sequentially with ti:e ficw cf pr<.'n*uct al*-ng
i5

its produetian route through rrr*rk in pr*cess and fi.;*she$ gr:':'Ss. '} f:r tb;
Las:L^e
Instead, the *utgrut trigger pcini reaehes b,ack a:id pulls i&e sta*rierd" tT
di.rect materials costs frclm &dateri*.Is a::<i trn Prceese Invantor.y *rrd L2*€ ^. i
the stan.Jard conversicn costs tlor riz:nufactr.li'ing the finished [,r*ds fiei.shed:
r3i +f Cai
6: Record the standard cost cf goods sold cEraring th.e g:eri*d" g+:ds are
= D'Li
-r r ui -e
F-t
Entry (C) Costof GcoCs Sold $*ri=Sf!*
Finished Gaods Inver:tcqy scs,$0s i9.3CO u-r
S,900 unit$ x P31.
lrni-,-c \F
7z Reeord undera;iplied eir *venapplied eCIalv*rsio:r eosts, lit cr-rr,i€
-,-:-
Oornpanies that use baekfi.ush eosting usually have lovr irrventr:ri*s, -^- ^j.--:rts.
l--,lf
so that underappiied or. overappiieti. ecnversion costs is written off g0<--t13s lE\
' to cost of goods sold only. The jour:ral entry t.* diep*se +f the difference r-c ilreni
between the actual conversion costs ;:reurred and standard e**versicri Case i.
costs applied"is: standard
of conrer
Ent4, td) Applicd. Conuersrore Cosis L20,A0g
F presei
Cast of Gaods SoId 6,000
Conuersian Costs Confrol 1g6,0t0
oi gc+ds

At the en,-l r:f the period, the ending inventory balances are: Ttrre enCi
ca haad
'atr
i ria:s and In Procem trnventory (P195,000 - P1S0,000) P5,000 unsold)-
Fr':isheii {joocl frr'*xirr-v (?310,000-I'>306,900} __rc cf ihi' Yt
re: Eslqg
1. Secticu
sequeati;
f;aisbed
 tft:J*^ l*"wf ;,,e Sql!" *
- U r: 6i7

Jllusl;ration I6-1, SeedonAcn page 285, surnmarizes the jour"nal eltries for
tids case" Illustration 16-2 *n prrge 286 shon s thei genera! ,,*dgo, ;i
this version oibaukflush costing. The elimination ofthe usual 'lr,ork"";;;;;,;
in prr:r:,,s,sr
acccrunt reduces the detailec recording rn the acc:otrntinp sysi;em.

{la'se 2-: prir.geq poin_ts are pnrcha-.e of ri'$i riiirrerials {stage 1) a.nd
s*-lc af finishe{i gaeds istag'e 4i

?liie case is rnucir mole diff'erent ironi a sequenti.al tracking cost:iryg

syste::n than tlle i:ackfi.teh crjsling system in Case r. 'lhis ,rioi Case i
liave th,: sa,nl* rrigger point, purchase oi raw materiais. "a""But tire second
irigger poi:rt i.n Case 2 i* the sale, not the compl.eiicin of finisheri units.
I
ILiustration 16-1 in *(ectiorr B, presents the jorirnai entrlis for Casc 2. The
tT*o trigger p+iirta are reF,res'ented by transactions (1i *.nci (,1). Eatry, (li
i:as^the $a-;rae trigger pai:rt as in Case 1, the purchase of materials. Entry
Gt for the conversicn costs incurred is recoi.d,rd in the .lame wav as in
Case_ 1.-Tligger pdint 2 is the sale of frnisn-ed gr;od.s (noi the compietion of
Fi-l* units.--as in case 1), so there is no eirtry corresponciing to enr.r.rl
(3) af Case 1. ?he cost cf finished units is computed oniy rvliei
!*
finished
'i grgds are splcl, rvhich correspcnds to entry &);f case i: g,g00 units soid
i
x P31 per uni.t = P306,900, which is composeri of clirect materials costs
(9,9c0 units x P19 per unit = P188,I00) anrlapplierl con,rersion costs (g.s00
uniis x P12 per unit = P1tr8,.S00),

N,-r cor,version costs are inventcried. As compared in Crse 1, Llase 2 cloes

i
not assign i)1.,200 (P12 per umt x 10G unit.s) r-rf ccnversion costs to finishet
r1
gcods inventory. Hence, Case 2 irliocates P1,200 le.ss in conversiorr costs
t_o inveniory relative to the conversion costd aliocated to inventorv jn
it case l. of the P12$,0I)c in-conversion cost, pllg,g00 is aliocateci ar
standard cost Eo the units sold. The rer,ai.ning p?,g00 (tzo,ttoo p1lg,sOti)
rl -
of conversicin costs is underapplieci. Entr1. ir\ in Illusiration 1G-1., section
:l E, presents the journal eniry to write off 166** un<lerapplied costs to ccr_*t
of gccds soici.
I

I
The- entng inventory of rnater-ials is p6,g0c (p5,0c0 direct materials s,t.ill
1 cn hancl + Ptr,900 direct rrraterials in the 100 units manufacturecl but
I
unsold). Illusiratio'
Jq-2, Section B,.shows the general ledger overvie*,
cf this versior:. of backflush costirrg. Entries are [eyed to Ilh]stration l6-
J 1. section 2. This approach closely approxirnates the cobts comp;r".t ;i"g
sequ-ential tracking when a company holds rninimal u,ork in p o".,**
finished qoods invdntories. ",,r1
 6t8 clqt:tr Li
l
F
1
*
Casa S: Trigger p*iaa*s ers cemapX*ti";rm *f g*ou$ finish*d arxe[te *f
pradaret {Stage &i s.:r$ sa},e s*f, fi:sisirsd gc,*ds {';Qtag* 4}
{
:L
itl
Thib cas* h:as 'c,lv(, tr;gg;er pr:iai,s, I$ustrati,:gr 1-6-3. '$s*ti*n C, precentc d
tl:.*;e;ur"i:,:"i c&ts'ies. in *rntrasi t* easq* *, *ilt* first trlgger po:.nt irr Ca*e 3
iS de-iny*d, u::tii. sh*r *empieti;-,n +i'ur:its. Xt is repr*sented by trarT.saeti*n + - 6-. I aa
'{3i"
Si::e* ihe purhe.-*e of s:t?w xir*tteri*ls is n*l a tr:"gger p*int, t}sre is i:t:
*ntry r*rresF*mriing tr: t:'asr,s*r;*icn {1} * f-'r:r*}ias*s of raw material"s" : l-:n::i: ::- "'sll
Ii.{u.*trs"i:i*n iS-2, S**iicrr t}, s}ruws the g*acrai 1e*.9*r overview *f this -il- r-nffi i

versi*;a crf be*k*.i:.*le **;:iing" E:e{ri*.s ar* ke;,;ed frc*r Jlhietration l-6-1,
See.f:it,n il. {"
; i,u.r u lwd
T :nnm-rg'ofrir

Th* ac,:oufill;lB;,1r.2;gfr"itgs i.iiesi;"ai.r<J.in C:rs'cs, t, 2 ai:C 3 dc,n,,t t-,tricti,r-

*rlher* to g*r:*-rally ;rc*ept*til a*e*ur.*ti.ng .1:ri.rru:iplec. F+:: examp!*, ",vork *..*i=r@.i,- "hj
in prc,cess- lyhi,:}:r i$ ;rrr asset, *.:i*t* i::.:t irr tl- t, r*ci:gnised il; th* fir.:a:r+ial -ilfl!,,UF
$tail+ r*r:is" l'Is*r* ci i-r;.r:kfiush .**r;l.ing, hov;**,rer, cit* ilt* g*n*'rally I:mormlulre
e*-**p{ed a*c*u:lti:-rg i..nneiFi* uf ::.izireriality i.n si"!.pE}*ri af th*:se l'ersior:s
r"'f ha.r:}<fiu.eh c*r+tis!A. Ar, :lluctrat*,f ,;n f ir': thl*.rr ce$esl kra*k*usir ccsiing - 3'um':qrd
+::ix aFF!j:*xit-*aii:: t'h.* .:=:rists tha* ..*,*r:trii" be r*r-,rrrt*d ur:*er sequential +ostiilg 15 l'lmr 566
cfietlicds by *h.angi-g tl:e r::.r.iurbqr *f trigger poinlo ar";d n"he.r* t}:ey ar*
l*c;i.*ed" If n:ai*rial a$qounts *f *"ireet matenais,iav+: *to::.' *r fr;ri.shed. g***e' ffii I'rm,,P,rnr
i*ventc"r:y exi*t, ,-:djlr,rting entrie* *ar: he in*lud$d inte b*ckflush g}.csing #:milL$
*4 SrrnuSd
pro*eduros.

As*uR:* there'are :::art*ria]. differ*${.:es i,3 operatir:g ixrcolu* asd E,,, I ' r**gqfr
ii:wrii*riee ba*+d" cn a ria*kfi,x:+}i **sii:-ig systbin and th.e usrai. stsnd*lrd :!,@$.aeml
cr:stir-rg systern" An adjueiislg entry e*n be ree*rded tc make the ba*kflush
*r;siing saiisfy *xternatr rr:pcrting r*qr:.irem*nts. Fcr exnznple, th* iir#,tu: :t
.oackfl"*sil ';00,llr
e$[ries in ilas* 3 res:e]6s i:l expensing a1t **nversion c*sts to
Ccst r:f g*eds ,5*1d {F1.18,8SS *i eta:adard *osts + :)?,?SCI write eff of tzLm
il:arl*rappiie* *cnvcrsi*s: *eret$ = FL3S,*S{}}" But suBpcse *o;nversi$n ao*ts : : @iur*d
were re6*?d*d a* *s:ffi.+ientl3,- mater:* ier am*unt to }:e i::.ctruded in &{aterial 3l :urug?il
I;:r'eert*r3" ?*h*;r eritly (Si, ,:[,:eir:g t]re Coxe'v'*rsion {jcsts aec&unts, would.
be revise *s f,"riir:ws: ffi -;uw[o,r

ytpplied Cr':n.rj*.r sr.oru (:*sis 3J8,80# re fu11' rdtrili

,?fu fs rrl$ I** Jrr. u * ra f r-* r3r {i $S *:r" i** r p J
"fi J,gs{?
I :trffiqurgn
Cosf ci Gorlr9s s;.1+l 6,8{}$ !g@a.M
{*;rll*;"si*.re e*sfs {l*rree;roJ 126,9G#

t-
-iiist- ltt - 7'i me tu! it.1:*/y:!!l $ S si" 9y-* 5li

-{li1asiraii*ra 3#-3-; "-fl+urnal Eratries iu E;nckfielsi: {l:sting

'b--t.j,G&,
**- 1 f;;-1tGen. r,r;,rt= -i:r'urchase r;{l}i:"cri
j 5?ir:
!ri.rr1 *h. e'l *r:*cls, an d,j aie cif Fin d Ci':r:ri*

l..r.t:::sct!c:ls
*f drtr:ct :ets,erials t\f*t:ri.-:is !;z Pli.:*ss.In'l.i:f;li;:t'r'ii!i,Si?(i
ii) Prrrch:::,'* titz.t.l
:rls i:: c.3;<;.ll le ts 5.ii1;
,tt:tr: l;

i?J Incur ccn:.ersicn {:o:ris Ccn. l,e;'sion Cr,'s Js Ccru Jrc; i t:!;.8{}{}
!r31.1 51 g; rz! ggr-r rtnf .{ l3{;,{}i}*
{3i ' Q*r:rp}e.tion oi finishad '.$iris,iud C*oCs l*ue;ict"3
3 1{t'*t}0
goeds fdutsriatrs *;.ri he Prccess ktt'et;lary i !){}.*!}*
Apptie,T Ca ns sersiat t, C o sts 1 2{},fi*ii

t+] liaie of 5*ished gecds Cosl r,rGccds Sold ,,;a$,90r)

Fiiiis lzed {;oa d s in'v et i, t a r^t .']rJ$"ss#

{5} i-In app lie#',1 verap Coiii,e; stct'" Ctsls

Ap7!:.eci. " i:.c,fi$$
d-e r P i e d.
1

Cast oi Gaods Sold ' q,Gfra

Cbrrtarsiop Cosf.q r:i.-rtf; ci i 26,0i]{}
S"".,"*rt ll. C-=.- ?*io T.-igger }'einis - Purchase of Dtett Ntalerials a:rii Saie al l:it'risire;ii
{i*':ris^
Tra*sacti+ns
(i) Pxrcl*asr: of di::ect :eateri*is frfa ti, ria Ls h tw tt l.or -.' 1*5,{Jfi{)
1$ 5.*$0
Payehle
.$cerssru*s
Aans;ersixs;t' rosis Ce n.*tci ;2G,A0t
{3i in*ur +or:ver*ion eosr,s
\:uv i.gLt.5 ,a-,'.cti:t ids l2€.ai]{}
{5i Compietr"an cf finishe<l No enery
gccCs
(4) $ate ofSinisiled gcods Casf c/Goods SoJcJ 3il6,9{}{}
.
M a t eria.l s lrut r. it> r e-
! r88" I Gt
Applied Canaersian, Casts 1 i 8,8{i0
Ur;.,lerap,plled or cveraPPlied Ap plied Conuer sior t C * s I s t 18,8{i0
{5) 7,2{}0
conrer-sior:. co*i,s Cast of Coads Sold
Cap,uersiam Cost s Cort trol i26,AL,{i

Secti.on C, Case S 1.,r"n gg iFrni.;i.r,.:,!

{}oo'-3s,

Trarsactiotis
(1) f urchase of direct materials l{o en*ry
(2) 1-ncur eonversion costs Conu,er sian Caets Contro| 126,040
ThriousAtcawfis 126,A4{}
(3) UompietiorE of fi.nished goods Fit r"slle:d Good's Inue roln ry 310,000
Aecounts Payable 190,$04
Appiied Conuersi.en C asts 120,000
i4) Sale offinished goods Costef Coods Saki sil6,900
Ein ished Goods Inueri.tarY 3#6,904
Ap pti.e d. Con u er sian Ca s ts t 2a,00a
i5) U:rderappiieri ar overaPPii*d
6,AAA
conversien ccste Cast af Goods Sold
C oizu er siott C o s ts Ccn'tro {. t 2{i,ailCI
d
If-

Illustrati+n LS-2:. Ge:reral tr,edger *verview of Bas:Ixflush eos*ing

,1
Sec*iorr F* Case 1: Three TriggerPerints- Ptrrqhese of SireetMeteriak,
eormpletieE if
fi"iiU** Gonds, *ad Satre +f Finished Goc'ds'"

arai i:r.Prroces*

F
I
I
I
I
I
*set-e
I
i

ffi
ffi
{s} sffi*
31C,S60

Sesticn E" Case 8: Two trtg$er Fe,i*ts:.Firrehe"se arf I}iregt Ma,*eri*le and sale of
Finisked Goods"

section 9:e*:* B: Twn trigger FErinis * cornpletlon oi Finished fioods and saie ai
Finishe'l Go+ds