The gross earnings of the factory workers for Vargas Company during the month of
ID: 2489440 • Letter: T
Question
The gross earnings of the factory workers for Vargas Company during the month of January are $62,300. The employer’s payroll taxes for the factory payroll are $8,500. The fringe benefits to be paid by the employer on this payroll are $4,300. Of the total accumulated cost of factory labor, 85% is related to direct labor and 15% is attributable to indirect labor.
(Credit account titles are automatically indented when amount is entered. Do not indent manually.)
No.
Account Titles and Explanation
Debit
Credit
(a)
(b)
(a) Prepare the entry to record the factory labor costs for the month of January. (b) Prepare the entry to assign factory labor to production.Explanation / Answer
No. Account Titles and Explanation Debit Credit (a) Factory wages payable A/C 62300 Employer fringe benefit payable A/C 4300 Employer payroll taxes payable A/c 8500 To Factory labor A/c 75100 (being factory wages,taxes payable, taxes payable by the employer for the month of january Factory labor a/c 75100 To Cash A/c 75100 (being cash paid for the expenses payable above) (b) Factory labor A/c 75100 To work in progress inventory A/c 63835 To manufacturing overheads A/c 11265 being the factory labor transferred to work In progress a/c for direct labor and manufacturing overheads a/c for indirect labor
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