Asked by RMerline Benjamin on Jun 13, 2024
Verified
Juarez Builders incurred $285,000 of labor costs for construction jobs completed during the month of August,of which $212,000 was direct and $73,000 was indirect supervisory costs.The correct journal entry to record the direct labor for the month is:
A) Debit Payroll Expense $212,000; credit Cash $212,000.
B) Debit Factory Wages Payable $285,000; credit Work in Process Inventory $212,000.
C) Debit Work in Process Inventory $212,000; credit Cash $285,000.
D) Debit Work in Process Inventory $285,000; credit Factory Wages Payable $285,000.
E) Debit Work in Process Inventory $212,000; credit Factory Wages Payable $212,000.
Direct Labor
The labor costs directly tied to the production of goods or services, involving tasks that specifically contribute to creating the final product.
Indirect Supervisory Costs
Costs associated with supervision that cannot be directly traced to a specific product or service but are necessary for production.
- Enter transactions through journal entries in a job order costing setup.
- Distinguish between direct and indirect costs in job order costing.
Verified Answer
TA
Tyler AdamsJun 15, 2024
Final Answer :
E
Explanation :
The direct labor costs should be recorded in the Work in Process Inventory account as a debit, and the Factory Wages Payable account (representing the amount owed to the employees) should be credited for the same amount. Therefore, the correct journal entry is Debit Work in Process Inventory $212,000; credit Factory Wages Payable $212,000. Option E is the only choice that matches this entry.
Learning Objectives
- Enter transactions through journal entries in a job order costing setup.
- Distinguish between direct and indirect costs in job order costing.
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