Module No.

4 – Storing and Issuing Materials

Learning Outcome/s:
 Enumerate and identify the different documents that circulate during material storage and
issuance
 Learn different methods of protecting materials during storage and issuance

Core Values/Biblical Principles:

Workplace spirituality includes many aspects like meaningful work, sense of community, and
organizational value. It is intended to interconnect past experiences and develop trust among
employees in a way that would lead the organization into a better and productive environment. If there
is no spirituality in the workplace, the organizational environment becomes challenging which would
create hurdles and issues.

Introduction:
Internal control procedures for purchasing must be accompanied by appropriate systems for storing and
issuing materials to ensure that the company’s investment in inventory is protected.

Body:
Storing Materials
The storeroom supervisor shall be responsible for the protection of materials in the storeroom and for
the identification of the materials.

Bin tag – informal record showing the quantities of the materials received, issued, and on hand at all
times.

Issuance of Materials
No materials are issued from the storeroom without a materials requisition. This document indicates
the quantity, material number, description, and job number to which the materials are to be charged.

Materials ledger card – serves as a perpetual inventory record. The materials ledger is a subsidiary
ledger which is verified against the Materials account in the general ledger. At the end of the accounting
period, the balance on the materials ledger card should equal the balance of the Materials account.

Materials requisition journal – after recording the requisition in the related materials ledger card, the
requisition is forwarded to the cost clerk who journalizes the transaction in the materials requisition
journal so that the effect of the issuance will be reflected in the general ledger.

Job cost sheet – the cost clerk’s next step is to post the information from the requisition to the
Materials section of the job cost sheet. Only the direct materials are posted in this document.

Departmental overhead analysis sheet – all indirect manufacturing expenses are posted from a
requisition to the Indirect Materials section of this document.

Materials Internal Control

The internal control procedures for storing and issuing materials should reflect the following:
1. Admittance to the storage area should be restricted.
2. Materials ledger cards, covering all receipts and issues should be maintained.
3. Each type of material should be clearly identified, stored and carefully protected while in
storage.
4. Materials should be issued only upon proper written authorization.
5. The accounting system should permit a periodic check of the materials ledger against the
balance of the Materials account.
6. Different persons should be involved in storage and issuance operations.
Materials Returned to Storeroom
Returned materials report – this must accompany the materials returned to the storeroom as a result of
requisitioning too many materials, withdrawing wrong materials or any other reasons.

Materials Returned to the Supplier

Return shipping order – is made together with a debit memorandum authorizing the return of the
materials to the supplier.

Summary:
An effective control system for storing and issuing materials should be adopted by the company to
safeguard its investment in these items. Materials must also be carefully identified, stored, and recorded
by the storeroom staff and must only be issued upon receipt of the necessary documents.

References:
Cost Accounting Principles and Procedural Applications by Pedro P. Guerrero, 2014-2015 edition