Sampson & Associates provides accounting services. It began Jobs 1 through 3 in the first week of January. The following transactions occurred that week.

(1) Purchased supplies on account totaling $1,500.

(2) Used supplies totaling $800 for various jobs.

(3) Processed timesheets showing the following:

(4) Applied overhead using a predetermined rate of $10 per direct labor hour.

(5) Completed Job 1 and billed the customer $3,000. Two entries are required—one for the cost of services, and another for revenue.

Required

a. Calculate the costs incurred for each of the three 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 Sampson & Associates earn from Job 1?

Transcribed Image Text:

Job 1, direct labor (50 hours) Job 2, direct labor (60 hours) Job 3, direct labor (10 hours) Indirect labor Total $1,500 1,700 400 900 $4,500