Job Order Cost Accounting for a Service Company The law firm of Furlan and Benson accumulates costs associated with individual cases, using a job order cost system The following transactions occurred during July July 3 Charged 700 hours of professional (lawyer) time to the Obsidian Co breech of contract suit to prepare for the trial, at a rate of $190 per hour 10 Reimbursed travel costs to employees for depositions related to the Obsidian case, $17,000 14 Charged 280 hours of professional time for the Obsidian trial at a rate of $290 per hour 18 Received invoice from consultants Wadsley and Harden for $74,500 for expert testimony related to the Obsidian trial 27 Applied office overhead at a rate of $70 per professional hour charged to the Obsidian case 31 Paid administrative and support salaries of $48,700 for the month 31 Used office supplies for the month, $16,500 31 Paid professional salaries of $189,400 for the month 31 Billed Obsidian $426,500 for successful defense of the case a Provide the journal entries for each of these transactions If an amount box does not require an entry, leave it blank July 3 Work in Process Salaries Payable July 10 Work in Process Cash July 14 Work in Process Salaries Payable July 18 Work in Process Consultant Fees Payable July 27 Work in Process Office Overhead July 31 Admin sal Office Overhead Cash July 31 Supplies Office Overhead Supplies July 31 Prof sal Salaries Payable Cash July 31 Billed Accounts Receivable Fees Earned July 31 Cost Cost of Services Work in Process Feedback a Record the direct costs in Work in Process Apply the overhead based on professional hours Record actual overhead in the Office Overhead account For cases completed, move the costs from Work in Process to Cost of Services b How much office overhead is over or underapplied Enter your answer as a positive number $ c Determine the gross profit on the Obsidian case, assuming that over or underapplied office overhead is closed monthly to cost of services $

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Sep 14, 2024

Job Order Cost Accounting for a Service Company The law firm of Furlan and Benson accumulates costs associated with individual cases, using a job order

Job Order Cost Accounting for a Service Company

The law firm of Furlan and Benson accumulates costs associated with individual cases, using a job order cost system. The following transactions occurred during July:

July 3.	Charged 700 hours of professional (lawyer) time to the Obsidian Co. breech of contract suit to prepare for the trial, at a rate of $190 per hour.
10.	Reimbursed travel costs to employees for depositions related to the Obsidian case, $17,000.
14.	Charged 280 hours of professional time for the Obsidian trial at a rate of $290 per hour.
18.	Received invoice from consultants Wadsley and Harden for $74,500 for expert testimony related to the Obsidian trial.
27.	Applied office overhead at a rate of $70 per professional hour charged to the Obsidian case.
31.	Paid administrative and support salaries of $48,700 for the month.
31.	Used office supplies for the month, $16,500.
31.	Paid professional salaries of $189,400 for the month.
31.	Billed Obsidian $426,500 for successful defense of the case.

a. Provide the journal entries for each of these transactions. If an amount box does not require an entry, leave it blank.

July 3	Work in Process
	Salaries Payable
July 10	Work in Process
	Cash
July 14	Work in Process
	Salaries Payable
July 18	Work in Process
	Consultant Fees Payable
July 27	Work in Process
	Office Overhead
July 31 Admin. sal.	Office Overhead
	Cash
July 31 Supplies	Office Overhead
	Supplies
July 31 Prof. sal.	Salaries Payable
	Cash
July 31 Billed	Accounts Receivable
	Fees Earned
July 31 Cost	Cost of Services
	Work in Process

Feedback

a. Record the direct costs in Work in Process. Apply the overhead based on professional hours. Record actual overhead in the Office Overhead account. For cases completed, move the costs from Work in Process to Cost of Services.

b. How much office overhead is over- or underapplied? Enter your answer as a positive number. $

c. Determine the gross profit on the Obsidian case, assuming that over- or underapplied office overhead is closed monthly to cost of services. $