Question

Which of the following pair of journal entries correctly records the current month's activity where the company had $21,030 in total factory labor costs that were paid in cash with $16,200 of this total for direct labor?A. Factory Payroll 21,030 Cash 21,030Wage Expense 16,200 Factory Overhead 4,830 Factory Payroll 21,030B. Factory Payroll 21,030 Cash 21,030Goods in Process Inventory 16,200 Wage Expense 4,830 Factory Payroll 21,030C. Cash 21,030 Factory Payroll 21,030Goods in Process Inventory 16,200 Factory Overhead 4,830 Factory Payroll 21,030D. Factory Payroll 21,030 Cash 21,030Goods in Process Inventory 16,200 Factory Overhead 4,830 Factory Payroll 21,030E. Cash 21,030 Factory Payroll 21,030Factory Payroll 21,030 Goods in Process Inventory 21,030

Answer 1

Answer:

----------------------    -   -------------------------------

Factory Payroll         21030

             Cash                        21030

----------------------    -    -------------------------------

Goods in process     16200

Factory Overhead     4830

       Factory Payroll               21030

----------------------    -    -------------------------------

Explanation: The payment of the total labor factory costs must be recorded, we debit the "Factory payroll" cost account and credit the "cash" account as they were paid in cash.

Then we must allocate these costs to the production process, therefore we debit the "goods in process" account for the amount of direct labor consumed, and "factory overhead" for the amount of indirect labor consumed, and finally credit the account " Factory payroll " for the total.