Jan. 4 Applied $3,624.00 of direct materials (requisition No. 670) and $8120 of

Question

Jan. 4 Applied $3,624.00 of direct materials (requisition No. 670) and $8120 of direct labor (time ticket No. 129) to Job No. 403, which will complete the job. The FICA rate is 7.65% of gross pay and the employees’ income tax rate is 18% of gross pay. When preparing the entry for applying direct labor, debit Work in Process for the gross pay, and credit Employees’ Income Tax Payable and FICA Tax Payable for the appropriate amounts and Salaries Payable for net pay.

Remember that employees are paid on the last day of each month.

Applied factory overhead to Job No. 403 is based upon 125% of direct labor cost.

Transferred the completed job to the finished goods account.

Explanation / Answer

Journals:

Journals:

Date Account Titles Debit Credit 4-Jan Work in Process $3,624     Raw Materials 3,624 (To record issuing the materials to the production department) Work in Process 8,120      Salaries and Wages payable 8,120 (To record for the direct labor Work in Process 10,150 Factory Overhead 10,150 (To record factory overhead costs) Finished Goods 21,894       Work in Process 21,894 (To record the finished goods) Work in Process 8,120       Employees' Income Tax            Payable (18%) 1,462       FICA Tax Payable(7.65%) 621       Salaries Payable 6,037 (To record tax payables)

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