Question

he following are the job cost related accounts for the law firm of Bonita 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 $2,100. 2. Issued supplies $3,100 (60% direct and 40% indirect). 3. Assigned labor costs based on time cards for the month which indicated labor costs of $79,300 (80% direct and 20% indirect). 4. Operating overhead costs incurred for cash totaled $42,100. 5. Operating overhead is applied at a rate of 90% of direct labor cost. 6. Work completed totaled $81,100.

Exercise 15-11 a-b (Part Level Submission) The following are the job cost related accounts for the law firm of Bonita 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. Purchased supplies on account $2,100. 2. Issued supplies $3,100 (50% direct and 40% indirect). 3. Assigned labor costs based on time cards for the month which indicated labor costs of $79,300 (80% direct and 20% indirect). 4. Operating overhead costs incurred for cash totaled $42,100. 5. Operating overhead is applied at a rate of 90% of direct labor cost. Work completed totaled $81,100. 1. 6. Debit (a) Journalize the transactions for March. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) No. Account Titles and Explanation Credit Supplies Accounts Payable 1. 2,100 2,100 2. Service Contracts in Process Operating Overhead Supplies 3. Service Contracts in Process Operating Overhead Service Salaries and Wages Operating Overhead Cash 5. Service Contracts in Process Operating Overhead 6. Cost of Completed Service Contracts Service Contracts in Process

Answer 1

Journal entry

No	General Journal	Debit	Credit
1	Supplies	2100
	Account payable		2100
2	Service contract in process	1860
	Operating overhead (3100*40%)	1240
	Supplies		3100
3	Service contract in process	63440
	Operating overhead (79300*20%)	15860
	Service salaries and wages		79300
4	Operating overhead	42100
	Cash		42100
5	Service contract in process (79300*80%*90%)	57096
	Operating overhead		57096
6	Cost of completed services	81100
	Service contract in process		81100

a) Predetermine overhead rate = 1000000/40000 = 25 per decorator hour