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a. Provide the journal entries for each of these transactions. If an amount box does not require an entry, leave it blank. Work in Process July 3 26,250 Office Overhead 26,250

a. Provide the journal entries for each of these transactions. If an amount box does not require an entry, leave it blank. Work in Process July 3 26,250 Office Overhead 26,250

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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### Job Order Cost Accounting for a Service Company The law firm of Furlan and Benson accumulates costs associated with individual cases using a job order cost system. The following transactions occurred during July: **July 3:** 1. Charged 175 hours of professional (lawyer) time at a rate of $150 per hour to the Obsidian Co. breach of contract suit to prepare for the trial. 2. Reimbursed travel costs to employees for depositions related to the Obsidian case, $12,500. 3. Charged 260 hours of professional time for the Obsidian trial at a rate of $185 per hour. 4. Received invoice from consultants Wadsley and Harden for $30,000 for expert testimony related to the Obsidian trial. 5. Applied office overhead at a rate of $62 per professional hour charged to the Obsidian case. **July 31:** 6. Paid administrative and support salaries of $28,500 for the month. 7. Used office supplies for the month, $4,000. 8. Paid professional salaries of $74,350 for the month. 9. Billed Obsidian $172,500 for successful defense of the case. #### Journal Entries **July 3:** - **Work in Process**: $26,250 - **Office Overhead**: $26,250 **July 10:** - **Office Overhead**: $12,500 - **Accounts Payable**: $12,500 **July 14:** - **Work in Process**: $48,100 - **Office Overhead**: $48,100 **July 18:** - [No entries required] **July 27:** - [No entries required] **July 31:** - Administrative Salaries, Supplies, and Professional Salaries entries are not shown. The amount box is left blank if no entry is required.
Transcribed Image Text:### Job Order Cost Accounting for a Service Company The law firm of Furlan and Benson accumulates costs associated with individual cases using a job order cost system. The following transactions occurred during July: **July 3:** 1. Charged 175 hours of professional (lawyer) time at a rate of $150 per hour to the Obsidian Co. breach of contract suit to prepare for the trial. 2. Reimbursed travel costs to employees for depositions related to the Obsidian case, $12,500. 3. Charged 260 hours of professional time for the Obsidian trial at a rate of $185 per hour. 4. Received invoice from consultants Wadsley and Harden for $30,000 for expert testimony related to the Obsidian trial. 5. Applied office overhead at a rate of $62 per professional hour charged to the Obsidian case. **July 31:** 6. Paid administrative and support salaries of $28,500 for the month. 7. Used office supplies for the month, $4,000. 8. Paid professional salaries of $74,350 for the month. 9. Billed Obsidian $172,500 for successful defense of the case. #### Journal Entries **July 3:** - **Work in Process**: $26,250 - **Office Overhead**: $26,250 **July 10:** - **Office Overhead**: $12,500 - **Accounts Payable**: $12,500 **July 14:** - **Work in Process**: $48,100 - **Office Overhead**: $48,100 **July 18:** - [No entries required] **July 27:** - [No entries required] **July 31:** - Administrative Salaries, Supplies, and Professional Salaries entries are not shown. The amount box is left blank if no entry is required.
### Financial Transactions and Analysis for July --- **June 14:** - **Work in Process:** $48,100 - **Office Overhead:** $48,100 **July 18:** _(No transactions listed)_ **July 27:** _(No transactions listed)_ **July 31:** - **Admin. Salary:** _(No amounts listed)_ - **Supplies:** _(No amounts listed)_ - **Professional Salary:** _(No amounts listed)_ - **Billed Amount:** _(No amounts listed)_ - **Cost:** _(No amounts listed)_ --- ### Questions: **b. Calculate Over/Underapplied Office Overhead** - **Enter your answer as a positive number:** _Input box provided for the dollar amount_ **c. Determine Gross Profit on the Obsidian Case** - **Assume that over- or underapplied office overhead is closed monthly to cost of services:** _Input box provided for the dollar amount_ --- _For educational purposes, students are expected to analyze the transactions and compute the necessary financial details. The entries involve calculating the differences in costs, understanding the application of overhead, and determining profit margins._
Transcribed Image Text:### Financial Transactions and Analysis for July --- **June 14:** - **Work in Process:** $48,100 - **Office Overhead:** $48,100 **July 18:** _(No transactions listed)_ **July 27:** _(No transactions listed)_ **July 31:** - **Admin. Salary:** _(No amounts listed)_ - **Supplies:** _(No amounts listed)_ - **Professional Salary:** _(No amounts listed)_ - **Billed Amount:** _(No amounts listed)_ - **Cost:** _(No amounts listed)_ --- ### Questions: **b. Calculate Over/Underapplied Office Overhead** - **Enter your answer as a positive number:** _Input box provided for the dollar amount_ **c. Determine Gross Profit on the Obsidian Case** - **Assume that over- or underapplied office overhead is closed monthly to cost of services:** _Input box provided for the dollar amount_ --- _For educational purposes, students are expected to analyze the transactions and compute the necessary financial details. The entries involve calculating the differences in costs, understanding the application of overhead, and determining profit margins._
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