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. Charged 680 hours of professional (lawyer) time at a rate of $200 per hour to the Obsidian Co. breech of contract suit to prepare for the trial 10. Reimbursed travel costs to employees for depositions related to the Obsidian case, $18,300 14. Charged 130 hours of professional time for the Obsidian trial at a rate of $250 per hour 18. Received invoice from consultants Wadsley and Harden for $71,900 for expert testimony related to the Obsidian trial 27. Applied office overhead at a rate of $65 per professional hour charged to the Obsidian case 31. Paid administrative and support salaries of $37,400 for the month 31. Used office supplies for the month, $12,600 31. Paid professional salaries of $160,300 for the month 31. Billed Obsidian $355,000 for successful defense of the case a. Provide the journal entries for each of these transactions. July 3 July 10 July 14 July 18 July 27 July 31 Admin. sal. July 31 Supplies July 31 Prof. sal. July 31 Billed July 31 Cost b. How much office overhead is over- or underapplied? Enter your answer as a positive number. c. Determine the gross profit on the Obsidian case, assuming that over- or underapplied office overhead is closed monthly to cost of services.
The Effect Of Prepaid Taxes On Assets And Liabilities
Many businesses estimate tax liability and make payments throughout the year (often quarterly). When a company overestimates its tax liability, this results in the business paying a prepaid tax. Prepaid taxes will be reversed within one year but can result in prepaid assets and liabilities.
Final Accounts
Financial accounting is one of the branches of accounting in which the transactions arising in the business over a particular period are recorded.
Ledger Posting
A ledger is an account that provides information on all the transactions that have taken place during a particular period. It is also known as General Ledger. For example, your bank account statement is a general ledger that gives information about the amount paid/debited or received/ credited from your bank account over some time.
Trial Balance and Final Accounts
In accounting we start with recording transaction with journal entries then we make separate ledger account for each type of transaction. It is very necessary to check and verify that the transaction transferred to ledgers from the journal are accurately recorded or not. Trial balance helps in this. Trial balance helps to check the accuracy of posting the ledger accounts. It helps the accountant to assist in preparing final accounts. It also helps the accountant to check whether all the debits and credits of items are recorded and posted accurately. Like in a balance sheet debit and credit side should be equal, similarly in trial balance debit balance and credit balance should tally.
Adjustment Entries
At the end of every accounting period Adjustment Entries are made in order to adjust the accounts precisely replicate the expenses and revenue of the current period. It is also known as end of period adjustment. It can also be referred as financial reporting that corrects the errors made previously in the accounting period. The basic characteristics of every adjustment entry is that it affects at least one real account and one nominal account.
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. | Charged 680 hours of professional (lawyer) time at a rate of $200 per hour to the Obsidian Co. breech of contract suit to prepare for the trial |
| 10. | Reimbursed travel costs to employees for depositions related to the Obsidian case, $18,300 |
| 14. | Charged 130 hours of professional time for the Obsidian trial at a rate of $250 per hour |
| 18. | Received invoice from consultants Wadsley and Harden for $71,900 for expert testimony related to the Obsidian trial |
| 27. | Applied office |
| 31. | Paid administrative and support salaries of $37,400 for the month |
| 31. | Used office supplies for the month, $12,600 |
| 31. | Paid professional salaries of $160,300 for the month |
| 31. | Billed Obsidian $355,000 for successful defense of the case |
a. Provide the
| July 3 | |||
| July 10 | |||
| July 14 | |||
| July 18 | |||
| July 27 | |||
| July 31 Admin. sal. | |||
| July 31 Supplies | |||
| July 31 Prof. sal. | |||
| July 31 Billed | |||
| July 31 Cost | |||
b. How much office overhead is over- or underapplied? Enter your answer as a positive number.
c. Determine the gross profit on the Obsidian case, assuming that over- or underapplied office overhead is closed monthly to cost of services.
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