The following are the job cost related accounts for the law firm of Colaw Associ

Question

The following are the job cost related accounts for the law firm of Colaw Associates and their manufacturing equivalents: Law Firm Accounts Manufacturing Firm Accounts Supplies Raw Materials Salaries and Wages Payable Factory Wages Payable Operating Overhead Manufacturing Overhead Service Contracts in Process Work in Process Cost of Completed Service Contracts Cost of Goods Sold Cost data for the month of March follow. 1.Purchased supplies on account $1,800. 2.Issued supplies $1,200 (60% direct and 40% indirect). 3.Assigned labor costs based on time cards for the month which indicated labor costs of $70,000 (80% direct and 20% indirect). 4.Operating overhead costs incurred for cash totaled $40,000. 5.Operating overhead is applied at a rate of 90% of direct labor cost. 6.Work completed totaled $75,000. Instructions (a) Journalize the transactions for March. (Omit explanations.) (b) Determine the balance of the Service Contracts in Process account. (Use a T-account.)

Explanation / Answer

b) work in process:direct material +direct labor +overhead applies

=720+56000+50400

=107120

Date Account Debit credit 1 supplies 1800 Accounts payable 1800 2 Work in process 720 manufacturing overhead [1200*.40] 480 supplies 1200 3 work in process 56000 Manufacturing overhead [70000*.20] 14000 Factory labor 70000 4 manufacturing overhead 40000 cash 40000 5 Work in process [56000*.90] 50400 manufacturing overhead 50400 6 finished goods inventory 75000 work in process 75000

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