examples from the manufacturing industry of:
o a journal entry that would be recorded that impacts the balance sheet
In the manufacturing industry, there are several types of journal entries that can impact the balance sheet. Here are a few examples:
1. Purchase of Raw Materials:
When a manufacturing company purchases raw materials to be used in production, it impacts the balance sheet. The journal entry would typically be recorded as follows:
Debit: Raw Materials Inventory (an asset account on the balance sheet)
Credit: Accounts Payable or Cash (depending on whether the materials were purchased on credit or paid in cash)
2. Incurrence of Factory Overhead Expenses:
Factory overhead expenses include costs like factory rent, utilities, maintenance, and depreciation of manufacturing equipment. When these expenses are incurred, the balance sheet is affected. The journal entry would be recorded as:
Debit: Factory Overhead (an expense account on the income statement)
Credit: Accrued Expenses Payable (a liability account on the balance sheet)
3. Recognition of Work-in-Progress Inventory:
Work-in-progress (WIP) inventory represents partially completed goods on the production floor. As the manufacturing process progresses, the value of the WIP inventory increases. The journal entry to record the increase in WIP inventory would be:
Debit: Work-in-Progress Inventory (an asset account on the balance sheet)
Credit: Raw Materials Inventory or Factory Overhead (depending on the specific costs being added to the WIP)
4. Recognition of Finished Goods Inventory:
When completed units of products are transferred from the production floor to the finished goods warehouse, the balance sheet is impacted. The journal entry would typically be recorded as:
Debit: Finished Goods Inventory (an asset account on the balance sheet)
Credit: Work-in-Progress Inventory
These are just a few examples of journal entries that impact the balance sheet in the manufacturing industry. Remember, when recording journal entries, consult with accounting principles and guidelines specific to your country or region.