PB14.

LO 4.8A leather repair shop incurred the following expenses while repairing luggage for a major airline.

Time cards showing direct labor: $750

Time cards showing indirect labor: $100

Purchased repair supplies on account: $1,500

Issued indirect supplies: $350

Utilities expense on account: $24,000

Overhead applied: 100% of direct labor costs

Journalize the listed transactions.

It is obvious that company is using job order costing method. In this method all costs related to a specific job is recorded in a work in process account open for that job. Journal entries to record the transactions given in question are given below.

Time cards showing direct labor: $750

Debit WIP Major Airline $ 750

Credit Payroll Account $ 750

Time cards showing indirect labor: $100

Debit Factory overhead control account $ 100

Credit Payroll Account $ 100

Purchased repair supplies on account: $1,500

Debit WIP Major Airline $ 1,500

Credit Repair Supplies $ 1,500

Issued indirect supplies: $350

Debit Factory overhead control account $ 350

Credit Indirect supplies stock $ 350

Utilities expense on account: $24,000

Debit Factory overhead control account $ 24,000

Credit Utilities bill payable $ 24,000

Overhead applied: 100% of direct labor costs

Debit WIP Major Airline $ 750

Credit Applied Overhead Account $ 750

(100% of 750)