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 $55,000. 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 MallJob 33

Pine Ridge EstatesMaterials and equipment$18,225$54,400Direct labor15,40027,200Overhead (applied)6,16010,880

Overhead has been applied at 40 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.

Job27333435Materials and equipment$4,900$6,700$6,500$4,800Direct labor (wages payable)6,4008,6507,8003,500

Other May Events

1. Received $14,400 payment on Job 24 delivered to customer in April.
2. Purchased materials and equipment for $11,300 on account.
3. Billed Pine Ridge Estates $149,000 and received payment for $145,000 of that amount.
4. Determined that payroll for indirect labor personnel totaled $840.
5. Issued supplies and incidental materials for current jobs costing $345.
6. Recorded overhead and advertising costs for the operation as follows (all cash except equipment depreciation).

Property taxes$740Storage area rental865Truck and delivery cost510Advertising and promotion campaign790Inspections390Telephone and other miscellaneous515Equipment depreciation640

Required:

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

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.

NoTransactionGeneral JournalDebitCredit

A1.Cash14,440 Accounts receivable14,440

B02Materials and equipment inventory11,300 Accounts payable11,300C

3aAccounts receivable149,000 Cash149,000D

3bAccounts receivable145,000 Sales revenue145,000E0

4Manufacturing overheadIndirect labor840 Wages payable840F0

5Materials and equipment inventory345 Work-in-processMaterials and equipment345G0

6Manufacturing overhead Selling costsAdvertising Cash Accumulated depreciationH0

7Manufacturing overheadIndirect labor Accounts payableI

08Manufacturing overheadIndirect labor Accumulated depreciation

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

Overapplied overhead

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

Materials and equipment inventory

Work-in-process inventory