Environmental Business Consultants, LLC (EBC) worked on and completed two projects during June 2019: a review of appropriate rates for solid waste and recycling collection within Klamath County, and a competitive procurement of landfill disposal services for the City of Redding. The following information relates to these two projects:

During June, the partner charged 10 hours to the rate review project and 20 hours to the procurement project; the manager charged 30 hours to the rate review project and 24 hours to the procurement project; and the staff charged 60 hours to the rate review project and 30 hours to the procurement project. On June 30, EBC billed its clients for the completed projects. The invoice for the rate review project was for \($60,000\) and for the procurement project was \($105,000.\)
Required

1. Prepare the journal entry to distribute the payroll to the projects during June. (Assume that the correct entry was made when the payroll was paid.)

2. Prepare the journal entry to apply the overhead to the projects during June.

3. Prepare the journal entry(ies) to record the completion of the projects as of the end of June. (Don’t forget the work that was performed on the jobs prior to June, which is reflected in the beginning WIP balance. Also, don’t forget that there is no finished goods inventory in a service firm—once the project is complete, it is billed to the client.)

4. Determine the amount of profit or loss that EBC earned on each of the two projects.

Transcribed Image Text:

WIP Inventory balance at June 1, 2019. Hours worked during June.. Payroll cost per hour: Rate Review Project-Klamath $46,320 100 Procurement Project-Redding $85,318 74 Partner $ 60 Manager Staff.. $ 38 $ 24 Overhead rate per labor hour. $ 25 59596959 $ 60 $ 38 $ $ 25 322 24