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:

DateTransactionAugust 3.Charged 430 hours of professional (lawyer) time to the Shadow Creek Co. breech of contract suit to prepare for the trial, at a rate of $220 per hour.10.Reimbursed travel costs to employees for depositions related to the Shadow Creek case, $25,700.14.Charged 120 hours of professional time for the Shadow Creek trial at a rate of $260 per hour.18.Received invoice from consultants Westerly and Henninger for $48,800 for expert testimony related to the Shadow Creek trial.27.Applied office overhead at a rate of $45 per professional hour charged to the Shadow Creek case.31.Paid administrative and support salaries of $17,600 for the month.31.Used office supplies for the month, $5,900.31.Paid professional salaries of $171,900 for the month.31.Billed Shadow Creek $257,400 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.

DateAccountDebitCreditAugust 3Work in Process Salaries Payable August 10Work in Process Cash August 14Work in Process Salaries Payable August 18Work in Process Consultant Fees Payable August 27Work in Process Office Overhead August 31 Admin. sal.Office Overhead Cash August 31 SuppliesOffice Overhead Supplies August 31 Prof. sal.Salaries Payable Cash August 31 BilledAccounts Receivable Fees Earned August 31 CostCost of Services Work in Process

Question Content Area

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