Question

Exercise 3-22 Recording costs of labor LO P2 Prepare journal entries to record the following production activities. Incurred $75,000 of direct labor in production (credit Factory Payroll Payable). Incurred $20,000 of indirect labor in production (credit Factory Payroll Payable). Paid factory payroll.

Answer 1

Answer:

WIP                            75,000 debit

       Factory Payroll Payable 75,000 credit

Factory Overhead     20,000 debit

       Factory Payroll Payable 20,000 credit

Explanation:

The direct labor is capitalized through work in process inventory to lter become finished good once the product is finished.

While the indirect labor is determinated as actual factory overhead to be later compare against the applied overhead