The Fly Company provides advertising services for clients across the nation. The Fly Company is presently working on four projects, each for a different client. The Fly Company accumulates costs for each account (client) on the basis of both direct costs and allocated indirect costs. The direct costs include the charged time of professional personnel and media purchases (air time and ad space). Overhead is allocated to each project as a percentage of media purchases. The predetermined overhead rate is 50% of media purchases. On August 1, the four advertising projects had the following accumulated costs:   August 1 Balances Vault Bank $75,600   Take Off Airlines 22,700   Sleepy Tired Hotels 52,900   Tastee Beverages 32,500   Total $183,700   During August, The Fly Company incurred the following direct labor and media purchase costs related to preparing advertising for each of the four accounts:   Direct Labor Media Purchases Vault Bank $52,600   $191,500   Take Off Airlines 23,500   168,500   Sleepy Tired Hotels 103,400   123,100   Tastee Beverages 117,600   91,900   Total $297,100   $575,000   At the end of August, both the Vault Bank and Take Off Airlines campaigns were completed. The costs of completed campaigns are debited to the cost of services account.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
icon
Concept explainers
Topic Video
Question
100%

12. The Fly Company provides advertising services for clients across the nation. The Fly Company is presently working on four projects, each for a different client. The Fly Company accumulates costs for each account (client) on the basis of both direct costs and allocated indirect costs. The direct costs include the charged time of professional personnel and media purchases (air time and ad space). Overhead is allocated to each project as a percentage of media purchases. The predetermined overhead rate is 50% of media purchases.

On August 1, the four advertising projects had the following accumulated costs:

  August 1 Balances
Vault Bank $75,600  
Take Off Airlines 22,700  
Sleepy Tired Hotels 52,900  
Tastee Beverages 32,500  
Total $183,700  

During August, The Fly Company incurred the following direct labor and media purchase costs related to preparing advertising for each of the four accounts:

  Direct Labor Media Purchases
Vault Bank $52,600   $191,500  
Take Off Airlines 23,500   168,500  
Sleepy Tired Hotels 103,400   123,100  
Tastee Beverages 117,600   91,900  
Total $297,100   $575,000  

At the end of August, both the Vault Bank and Take Off Airlines campaigns were completed. The costs of completed campaigns are debited to the cost of services account.

 

a. Journalize the summary entry to record the direct labor costs for the month.
a. Work in Process
Salaries Payable
Feedback
b. Journalize the summary entry to record the media purchases for the month.
b. Work in Process
Accounts Payable
Feedback
c. Journalize the summary entry to record the overhead applied for the month.
c. Work in Process
Agency Overhead
Feedback
d. Journalize the summary entry to record the completion of Vault Bank and Take Off Airlines for the month.
d. Cost of Services
Work in Process
Transcribed Image Text:a. Journalize the summary entry to record the direct labor costs for the month. a. Work in Process Salaries Payable Feedback b. Journalize the summary entry to record the media purchases for the month. b. Work in Process Accounts Payable Feedback c. Journalize the summary entry to record the overhead applied for the month. c. Work in Process Agency Overhead Feedback d. Journalize the summary entry to record the completion of Vault Bank and Take Off Airlines for the month. d. Cost of Services Work in Process
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 3 steps

Blurred answer
Knowledge Booster
Costing Systems
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education