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 $48,000. 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 Bob 27 Job 33 Highlands Mall Pine Ridge Estates Materials and equipment $ 53,700 Direct lobor 14,700 26,850 Overhead (applied) 4,410 8,055 $17,175 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 Materials and equipment Direct labor (wages payable) 27 $4,200 5,700 33 $6,000 7.950 34 $5, Bee 7,100 35 $4,100 2,800 Other May Events 1. Received $13,700 payment on Job 24 delivered to customer in April 2. Purchased materials and equipment for $10,600 on account 3. Billed Pine Ridge Estates $142,000 and received payment for $135,000 of that amount. 4. Determined that payroll for indirect labor personnel totaled $770 5. Issued supplies and incidental materials for current jobs costing $275 Property taxes Storage area rental Truck and delivery cost Advertising and promotion campaign Inspections Telephone and other miscellaneous Equipment depreciation $670 795 440 720 320 445 570 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. Journal entry worksheet A DE F G H > Record $13,700 payment received on account. Note: Enter debits before credits. Transaction General Journal Debit Credit 1 Record entry Clear entry View general journal Journal entry worksheet Record purchase of materials and equipment of $10,600 on account. Note: Enter debits before credits. Transaction 02 General Journal Debit Credit Record entry Clear entry View general journal Journal entry worksheet Record receipt of $135,000 towards the billings. Note: Enter debits before credits. General Journal Transaction 3b Debit Credit Record entry Clear entry View general journal Journal entry worksheet B D E F G H I > Record indirect labor cost of $770. Note: Enter debits before credits. Transaction General Journal Debit Credit 04 Record entry Clear entry View general journal Journal entry worksheet Record charges to work in process. Note: Enter debits before credits. General Journal Transaction 07 Debit Credit Record entry Clear entry View general journal Journal entry worksheet Record transfer of Job 33. Note: Enter debits before credits. General Journal Debit Transaction 08 Credit Record entry Clear entry View general journal Required A Required B Required C Calculate the amount of over- or underapplied overhead for the month. Required A Required B Required C Determine inventory balances for Materials and Equipment Inventory and Work-in-process inventory. Materials and equipment inventory Work-in-process inventory
