MMAC Section 3 : Integrated Bookkeeping

Question 1

Integrated Bookkeeping For Materials?

Answer 1

Materials Cost Account

Dr Cr

Opening Balance Issues to Production (WIP)

Purchases (Cash & Credit) Returns to Suppiers (Asset)

Returns To Stores (>Asset) Production Overheads (Expense A/C)

                                                           Statement of Profit or Loss (Write Off)

                                                                                              Closing Balance

Question 2

Integrated bookkeeping for systems of labour?

Answer 2

Wages Control Account

Dr Cr

Bank (Net Pay) Production > WIP (Direct Labour)

HRMC Liability (PAYE&NIC)	                      Production Overheads > Expense A/C 
                                                                                                          (Indirect Labour) Pension Liability	

Trade Union Liability

Question 3

Integrated Bookkeeping for Overheads?

Answer 3

Production Overheads
Dr Cr

Actual Overhead Cost Absorbed Overheads
(Material, Labour & Expenses) (Overheads absorbed into production)*

Over Absorbed Overheads Under Absorbed Overheads
(Debit Balance = Over absorbed) (Credit Balance = Under absorbed)

*Budgeted overhead absorption rate x Actual Activity = Overheads Absorbed

Question 4

What is the adjustment for Under Absorption of Overheads?

Answer 4

Dr Statement of Profit or Loss
Cr Production Overheads

Record expense, reduce profits

Question 5

What is the adjustment for Over Absorption of Overheads?

Answer 5

Dr Production Overheads

Cr Statement of Profit and Loss

Question 5

What is the adjustment for Over Absorption of Overheads?

Answer 5

Dr Production Overheads
Cr Statement of Profit and Loss

Record decrease in expense; increase profits