Question

1. In the current fiscal year, the company paid $320,000 to its factory employees. Of this amount, 60% was direct labor and the rest was indirect. What is the journal entry to record this economic event?

   		Work In Process Inventory 320,000 Wages Payable 320,000
   		Wages Expense 320,000    Wages Payable 320,000
   		Work In Process Inventory 192,000 Wages Expense 128,000 Wages Payable 320,000
   		Work In Process Inventory 192,000 Manufacturing Overhead 128,000    Wages Payable 320,000

Answer 1

Answer -

Work In Process Inventory		192,000
Manufacturing Overhead		128,000
Wages Payable			320,000

Explanation-

Direct labor costs

1) wages or salaries paid to employess directly related to the production of goods and the performance of services.

2) Wages or salaries paid to them directly increase the cost of the inventory.( Dr Work In Process Inventory)

Indirect labour costs

1) Wages and salaries paid to empolyees not directly related to the production of goods and the performance of services.

2) Wages and salaries paid to them is treated as an overhead expense. (Dr Manufacturing Overhead)