Kim's Asphalt does driveway and parking lot resurfacing work for large commercial clients as well as small residential clients. An inventory of materials and equipment is on hand at all times so that work can start as quickly as possible. Special equipment is ordered as required. On May 1, the Materials and Equipment Inventory account had a balance of $44,000. The Work-in-Process Inventory account is maintained to record costs of work not yet complete. There were two such jobs on May 1 with the following costs.

	Job 27 Highlands Mall			Job 33 Pine Ridge Estates
Materials and equipment	$	16,575		$	53,300
Direct labor		14,300			26,650
Overhead (applied)		4,290			7,995

Overhead has been applied at 30 percent of the costs of direct labor.

During May, Kim's Asphalt started two new jobs. Additional work was carried out on Jobs 27 and 33, with the latter completed and billed to Pine Ridge Estates. Details on the costs incurred on jobs during May follow.

Job	27			33			34			35
Materials and equipment	$	3,800		$	5,600		$	5,400		$	3,700
Direct labor (wages payable)		5,300			7,550			6,700			2,400

Other May Events

1. Received $13,300 payment on Job 24 delivered to customer in April.
2. Purchased materials and equipment for $10,200 on account.
3. Billed Pine Ridge Estates $138,000 and received payment for $115,000 of that amount.
4. Determined that payroll for indirect labor personnel totaled $730.
5. Issued supplies and incidental materials for current jobs costing $235.
6. Recorded overhead and advertising costs for the operation as follows (all cash except equipment depreciation).

Property taxes	$	630
Storage area rental		755
Truck and delivery cost		400
Advertising and promotion campaign		680
Inspections		280
Telephone and other miscellaneous		405
Equipment depreciation		530

Required:

a. Prepare journal entries to record the flow of costs for operations during May.

A. Record $13,300 payment received on account. B. Record purchase of materials and equipment of $10,200 on account. C. Record billing of $138,000. D. Record receipt of $115,000 towards the billings. E. Record indirect labor cost of $730. F. Record issue of supplies and incidental materials for current jobs costing $235. G. Record overhead, advertising and depreciation cost as per the table given above. H. Record charges to work in process. I. Record transfer of Job 33.

b. Calculate the amount of over- or underapplied overhead for the month.

c. Determine inventory balances for Materials and Equipment Inventory and Work-in-process inventory.