Question

During June, Buttrey Corporation incurred $84.000 of Grect labor costs and $24,000 of indirect labor costs. The journal entry to record the accrual of these wages would include a Multiple Choice debt to work in Process of 504.000 Cred to work in Process of SOB,000 o o debit to Work in Process of $100,000 o credit to Work in Process of 4000

Answer 1

Solution

Part1: The entry to record the accrual of these wages would include a –

Debit to Work-in-Process of $84,000

Explanation: $84,000 is the direct labor cost related to production.

The indirect labor cost of $24,000 would include a debit to Manufacturing Overhead.

The entry to record the accrual of the wages is as follows,

Work in Process          Debit $84,000

Manufacturing overhead Debit $24,000

Wages Payable                       Credit $108,000

Part2:

Bunnell Corporation

The journal entry to record the transfer of completed jobs –

Account Titles	Debit	Credit
Finished Goods Inventory	$1,461,900
Work-in-Process		$1,461,900
(To record cost of completed jobs)

Part3:

Wages paid to supervisor of the warehouse where raw materials and parts are temporarily stored before being used in production is considered an example of …

Choice D

	Direct Labor	Period Cost
D	No	No

Explanation:

Wages paid to supervisor of the warehouse are fixed in nature and does not vary with the nature or number of items stored in the warehouse. Regardless of what items are stored in the warehouse, the supervisor of the warehouse would be paid on period basis.

Hence, this is not direct labor cost.

But, since the warehouse is used to store both direct and indirect materials related to production, the wages to supervisor forms part of indirect cost.

However, wages to supervisor is also not a period cost, period costs are related to costs incurred on marketing and sales of goods produced.

Hence, the correct option is D.

Part4:

Journal entry to record the cost of goods sold referred to the item h above:

Account Titles	Debit	Credit
Cost of Goods Sold	$1,461,900
Finished Goods		$1,461,900
(To record the cost of goods sold)

The entry to record sales –

Account Titles	Debit	Credit
Accounts Receivable	$3,172,500
Sales		$3,172,500
(To record sales on account)