Direct Labor
Definition: Wages of production workers
Scope:ModerateDifficulty:Easy
Wages of production workers
Common Journal Entries
| Account | Debit | Credit |
|---|---|---|
| 1. Record direct labor | ||
| Factory workers earn $15,000 on production. | ||
| Work-in-Process InventoryAsset+ | $15,000 | |
| Wages PayableLiability+ | $15,000 | |
| Labor cost added to WIP (product cost, not period expense). | ||
T-AccountsA visual representation of a ledger account shaped like the letter T. Left side shows debits, right side shows credits.
Work-in-Process InventoryWork-in-Process InventoryAssetA resource owned by the business. Normal balance: debit. Debits increase, credits decrease.
DebitLeft side of a journal entry. Increases assets and expenses. Decreases liabilities, equity, and revenue.
$15,000.00
◀ Normal bal.
CreditRight side of a journal entry. Increases liabilities, equity, and revenue. Decreases assets and expenses.
$15,000.00
Wages PayableWages PayableLiabilityAn obligation the business owes to others. Normal balance: credit. Credits increase, debits decrease.
DebitLeft side of a journal entry. Increases assets and expenses. Decreases liabilities, equity, and revenue.
CreditRight side of a journal entry. Increases liabilities, equity, and revenue. Decreases assets and expenses.
$15,000.00
Normal bal. ▶
$15,000.00
DurationN/A
External Links
- Direct labor cost — Wikipedia