Question

PB14.

Answer 1

Answer:

It is obvious that company is using job order costing method. In this method all costs related to a specific job is recorded in a work in process account open for that job. Journal entries to record  the transactions given in question are given below.

Time cards showing direct labor: $750

Debit WIP Major Airline               $ 750

Credit Payroll Account                $ 750

Time cards showing indirect labor: $100

Debit Factory overhead control account  $ 100

Credit Payroll Account                                $ 100

Purchased repair supplies on account: $1,500

Debit WIP Major Airline             $ 1,500

Credit Repair Supplies               $ 1,500

Issued indirect supplies: $350

Debit Factory overhead control account  $ 350

Credit Indirect supplies  stock                   $ 350

Utilities expense on account: $24,000

Debit Factory overhead control account     $ 24,000

Credit Utilities bill payable                             $ 24,000

Overhead applied: 100% of direct labor costs

Debit WIP Major Airline                               $ 750

Credit Applied Overhead Account              $ 750

(100% of 750)