Job Order Cost Accounting Entries for a Service Business The law firm of Tilton

Question

Job Order Cost Accounting Entries for a Service Business

The law firm of Tilton and Henderson accumulates costs associated with individual cases, using a job order cost system. The following transactions occurred during June:

a. Provide the journal entries for each of the above transactions.

b. How much office overhead is over- or underapplied? Enter your answer as a positive number.
$

c. Determine the gross profit on the Rucker case, assuming that over- or underapplied office overhead is closed monthly to cost of services.
$

June 4. Charged 560 hours of professional (lawyer) time to the Rucker Co. breech of contract suit to prepare for the trial, at a rate of $150 per hour. 8. Reimbursed travel costs to employees for depositions related to the Rucker case, $15,400. 12. Charged 250 hours of professional time for the Rucker trial at a rate of $270 per hour. 16. Received invoice from consultants Wenzel and Lachgar for $46,100 for expert testimony related to the Rucker trial. 24. Applied office overhead at a rate of $50 per professional hour charged to the Rucker case. 30. Paid secretarial and administrative salaries of $28,800 for the month. 30. Used office supplies for the month, $9,700. 30. Paid professional salaries of $180,100 for the month. 30. Billed Rucker $289,200 for successful defense of the case.

Explanation / Answer

Tilton & Henderson Journal entries Date Account Title Dr $ Cr $ Jun 4.. Rucker & Co Trial -Job order        84,000.00 Professional Salary payable          84,000.00 (560 hrs prof fees charged ) Jun8. Rucker & Co Trial -Job order        15,400.00 Cash          15,400.00 (travel expense charged) Jun12. Rucker & Co Trial -Job order        67,500.00 Professional Salary payable          67,500.00 (250 hrs prof fees charged) Jun16. Rucker & Co Trial -Job order        46,100.00 Consultant Fess Payable          46,100.00 ( Consultant fees charged to job) Jun24. Rucker & Co Trial -Job order        40,500.00 Office Overhead a/c          40,500.00 ( OH applied to job) Jun 30. Office Overhead a/c        28,800.00 Cash          28,800.00 ( Paid salaries of office staff) Jun 30. Office Overhead a/c           9,700.00 Office Supplies inventory             9,700.00 Jun 30. Professional Salary payable      180,100.00 Cash        180,100.00 Jun30. Service Revenue        289,200.00 Accounts Receivable      289,200.00 ( billed Rucker for the job ) Office Overhead Incurred Secretarial & Admin salary        28,800.00 Office supplies           9,700.00 Total office overhead incurred        38,500.00 Office Overhead applied        40,500.00 Office Overhead over applied           2,000.00 Rucker case Detailed cost Amt $ Professional fees      151,500.00 Travel cost        15,400.00 Consultant fees          46,100.00 Office overhead applied        40,500.00 Less : Over applied Office overhead        (2,000.00) Cost of services      251,500.00 Revenue from Service      289,200.00 Gross Profit from Rucker Case        37,700.00

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