Management Consulting Inc. provides consulting services and began operations on September 1. It began Jobs 1 through
Question:
Management Consulting Inc. provides consulting services and began operations on September 1.
It began Jobs 1 through 4 during the first half of September. The following transactions occurred during that time.
(1) Purchased supplies on account totaling \($6,000\).
(2) Used supplies totaling \($3,200\) for various jobs.
(3) Processed timesheets showing the following:
(4) Applied overhead using a predetermined rate of 120 percent of direct labor cost.
(5) Completed Jobs 1 and 2 and billed the customers \($20,000\) and \($21,000,\) respectively.
Two entries are required—one for the cost of services, and another for revenue.
Required
a. Calculate the costs incurred in September for each of the four jobs.
b. Make the appropriate journal entry for each item described above. Assume all payments will be made next month.
c. How much gross profit did Management Consulting Inc. earn from Job 1 and Job 2?
d. What is the amount in Work in Process at the end of the first half of September?
Step by Step Answer:
