An Example of Accounting for the Job Order Costing System
Purchase raw materials.
On January 3, National Snow Globe purchased $50,000 worth of raw materials on account. You debit Raw materials inventory for $50,000 and credit Accounts payable for $50,000.
The debit to Raw materials inventory (a debit account) increases that account’s balance; the credit to Accounts payable (a credit account) increases that account’s balance.