Show Flow of Costs to Jobs: Pulsar Light Equipment Company assembles light and sound equipment for installa- tion in various entertainment facilities. An inventory of materials and equipment is on hand at all times so that installation may be started as quickly as possible. Special equipment is ordered as required. On September 1, the Materials and Equipment Inventory account had a balance of $48,000. A Work in Process Inventory account is maintained to record costs of installation work not yet complete. There were two such jobs on September I, with the following costs:

Overhead has been applied at 15 percent of the costs of materials and equipment installed.

During September, two new installations were begun. Additional work was car- ried out on Job Nos. 46 and 51, with the latter job completed and billed to the Stars Theater. Details on the costs incurred on jobs during September are as follows:

In addition to these costs, other events of the period included:

1. $25,000 payment received on Job No. 55 delivered to customer.

2. Purchased materials and equipment for $18,700.

3. Billed Stars Theater $175,000 and received payment for $100,000 of that amount.

4. Payroll for indirect labor personnel totaled $1.300.

5. Issued supplies and incidental installation materials for current jobs. The cost of these items was $310.

6. Recorded overhead and advertising costs for the installation operation as follows (all cash except equipment depreciation):

Required:

a. Journal entries to record the flow of costs for the installation operation during September.

b. Amount of over- or underapplied overhead for the month. This amount is debited or credited to Cost of Goods Sold.

c. Inventory balances for Materials and Equipment Inventory and Work in Process Inventory.

Transcribed Image Text:

Materials and equipment Technician labor Overhead (applied) Job No. 46 Wheels and Spokes Country Music Hall $32,000 6,500 4,800 Job No. 51 Stars Theater $95,000 9,700 14,250