Question

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

July 3.	Charged 680 hours of professional (lawyer) time to the Obsidian Co. breech of contract suit to prepare for the trial, at a rate of $150 per hour.
10.	Reimbursed travel costs to employees for depositions related to the Obsidian case, $20,300.
14.	Charged 120 hours of professional time for the Obsidian trial at a rate of $270 per hour.
18.	Received invoice from consultants Wadsley and Harden for $46,300 for expert testimony related to the Obsidian trial.
27.	Applied office overhead at a rate of $60 per professional hour charged to the Obsidian case.
31.	Paid administrative and support salaries of $34,100 for the month.
31.	Used office supplies for the month, $11,500.
31.	Paid professional salaries of $194,300 for the month.
31.	Billed Obsidian $283,600 for successful defense of the case.

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

July 3
July 10
July 14
July 18
July 27
July 31 Admin. sal.
July 31 Supplies
July 31 Prof. sal.
July 31 Billed
July 31 Cost

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

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

Answer 1

	Date	General Journal				Debit	Credit
	3-Jul	Work in process				102000
		Salaries payable					102,000
	10-Jul	Work in process				20,300
		cash					20,300
	14-Jul	Work in process				32400
		Salaries payable					32,400
	18-Jul	work in process				46,300
		Consultant fees payable					46,300
	27-Jul	Work in process				48000
		office overhead					48,000
	31-Jul	office overhead				34,100
		Cash					34,100
	31-Jul	office overhead				11,500
		Supplies					11,500
	31-Jul	Salaries payable				194,300
		cash					194,300
	31-Jul	Accounts receivable				283,600
		Fees earned					283,600
	31-Jul	Cost of services				249,000
		work in process					249,000
	b)	office overhead over applied				2,400
	c)	Gross profit				37,000
		(283600 - (249000-2400)