Question

Journalize the following labor-related transactions for Portland Creations at its plant in Portland, Oregon. Assume that the labor has been incurred, but not yet paid. Plant janitor's wages Plant furnace operator's wages Glass blower's wages $ 620 910 77,000 Journalize the transactions. (Record debits first, then credits. Exclude explanations from any journal entries. Prepare a single compound journal entry.)

Answer 1

Answer: Debit overhead expenses $78,530 Credit wages payable $78,530

Explanation: The $78,530 was arrived at by adding all the wages amount ($620 + $910 + $77 000). Recognizing the journals as compound entries means the total amount of the wages would be used instead of simply recognizing the debits and credits for each wage amount.

Since the wages have been incurred but not paid, a payable has to be recognized. When payment is eventually to be made, it would be from the payable account by way of debiting the payable account and crediting cash.