Job Order Costing for a Service Company The law firm of Prawitt and Bradford accumulates costs associated with individual cases, using a job order costing. The following transactions occurred during August: Date Transaction August 3. Charged 160 hours of professional (lawyer) time to the Shadow Creek Co. breech of contract suit to prepare for the trial, at a rate of $200 per hour. 10. Reimbursed travel costs to employees for depositions related to the Shadow Creek case, $13,000. 14. Charged 260 hours of professional time for the Shadow Creek trial at a rate of $185 per hour. 18. Received invoice from consultants Westerly and Henninger for $40,000 for expert testimony related to the Shadow Creek trial. 27. Applied office overhead at a rate of $70 per professional hour charged to the Shadow Creek case. 31. Paid administrative and support salaries of $34,800 for the month. 31. Used office supplies for the month, $3,500. 31. Paid professional salaries of $80,100 for the month. 31. Billed Shadow Creek $180,900 for successful defense of the case. a. Provide the journal entries for each of these transactions. If an amount box does not require an entry, leave it blank. b. How much office overhead is over- or underapplied? Enter your answer as a positive number. $ c. Determine the gross profit on the Shadow Creek case, assuming that over- or underapplied office overhead is closed monthly to cost of services.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Job Order Costing for a Service Company

The law firm of Prawitt and Bradford accumulates costs associated with individual cases, using a job order costing. The following transactions occurred during August:

Date	Transaction
August 3.	Charged 160 hours of professional (lawyer) time to the Shadow Creek Co. breech of contract suit to prepare for the trial, at a rate of $200 per hour.
10.	Reimbursed travel costs to employees for depositions related to the Shadow Creek case, $13,000.
14.	Charged 260 hours of professional time for the Shadow Creek trial at a rate of $185 per hour.
18.	Received invoice from consultants Westerly and Henninger for $40,000 for expert testimony related to the Shadow Creek trial.
27.	Applied office overhead at a rate of $70 per professional hour charged to the Shadow Creek case.
31.	Paid administrative and support salaries of $34,800 for the month.
31.	Used office supplies for the month, $3,500.
31.	Paid professional salaries of $80,100 for the month.
31.	Billed Shadow Creek $180,900 for successful defense of the case.

a. Provide the journal entries for each of these transactions. If an amount box does not require an entry, leave it blank.

b. How much office overhead is over- or underapplied? Enter your answer as a positive number.
$

c. Determine the gross profit on the Shadow Creek case, assuming that over- or underapplied office overhead is closed monthly to cost of services.
$

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