In actual operation, the amount of expense to be charged against completed work will be computed, and the following entry made:
| Manufacturing Account | $______ | |
| Expense Distribution | $______ | |
| The amount of expense charged to jobs completed. |
If the expense ratio used were exact, the expense distribution account would balance at the end of each month, but owing to the fluctuations, a balance will remain. This is adjusted by increasing or decreasing the percentage used during the following month, and in this way the accounts are kept in balance.
Manufacturing account has been charged with labor, material, and expense,—the total manufacturing cost. Completed goods are charged to a finished goods account, the entry being:
| Finished Goods | $______ | |
| Manufacturing Account | $______ | |
| Net cost of goods completed |
But manufacturing account will not balance, for there always will be work in process, and the balance of the account will be the cost to date of this work in process, a most important record.
This discussion is not intended to cover every possible use of the private ledger, but, by means of examples, to suggest its possibilities. The explanations and examples should afford the student many hints of value.
EXERCISE
On a certain date, the following transactions are recorded on the books of Carter & Adams: