Job Order Costing for a Service Company

The law firm of Prawitt and Bradford accumulates costs associated with individual cases, using job order costing. The following transactions occurred during August:

Date Transaction

August $3.$ Charged $670$ hours of professional $($lawyer$)$ time to the Shadow Creek Co$.$ breech of contract suit to prepare for the trial, at a rate of $$150$ per hour.

$10.$ Reimbursed travel costs to employees for depositions related to the Shadow Creek case, $$19,700.$

$14.$ Charged $290$ hours of professional time for the Shadow Creek trial at a rate of $$280$ per hour.

$18.$ Received invoice from consultants Westerly and Henninger for $$50,000$ for expert testimony related to the Shadow Creek trial.

$27.$ Applied office overhead at a rate of $$75$ per professional hour charged to the Shadow Creek case.

$31.$ Paid administrative and support salaries of $$51,100$ for the month.

$31.$ Used office supplies for the month, $$17,300.$

$31.$ Paid professional salaries of $$193,900$ for the month.

$31.$ Billed Shadow Creek $$367,800$ for successful defense of the case.

Question Content Area

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

DateAccountDebitCredit

August $3$

Work in Process

Salaries Payable

August $10$

Work in Process

Cash

August $14$

Work in Process

Salaries Payable

August $18$

Work in Process

Consultant Fees Payable

August $27$

Work in Process

Office Overhead

August $31$ Admin. sal.

Office Overhead

Cash

August $31$ Supplies

Office Overhead

Supplies

August $31$ Prof. sal.

Salaries Payable

Cash

August $31$ Billed

Accounts Receivable

Fees Earned

August $31$ Cost

Cost of Services

Work in Process

Feedback Area

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.

Question Content Area

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

fill in the blank $1$ of $1$$

$3,600$

Overapplied

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

fill in the blank $1$ of $1$$

$400$