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5 January, 08:18

PB14.

LO 4.8A leather repair shop incurred the following expenses while repairing luggage for a major airline.

Time cards showing direct labor: $750

Time cards showing indirect labor: $100

Purchased repair supplies on account: $1,500

Issued indirect supplies: $350

Utilities expense on account: $24,000

Overhead applied: 100% of direct labor costs

Journalize the listed transactions.

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  1. 5 January, 11:53
    0
    It is obvious that company is using job order costing method. In this method all costs related to a specific job is recorded in a work in process account open for that job. Journal entries to record the transactions given in question are given below.

    Time cards showing direct labor: $750

    Debit WIP Major Airline $ 750

    Credit Payroll Account $ 750

    Time cards showing indirect labor: $100

    Debit Factory overhead control account $ 100

    Credit Payroll Account $ 100

    Purchased repair supplies on account: $1,500

    Debit WIP Major Airline $ 1,500

    Credit Repair Supplies $ 1,500

    Issued indirect supplies: $350

    Debit Factory overhead control account $ 350

    Credit Indirect supplies stock $ 350

    Utilities expense on account: $24,000

    Debit Factory overhead control account $ 24,000

    Credit Utilities bill payable $ 24,000

    Overhead applied: 100% of direct labor costs

    Debit WIP Major Airline $ 750

    Credit Applied Overhead Account $ 750

    (100% of 750)
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