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 ordere as required. On May 1, the Materials and Equipment Inventory account had a balance of $51,000. 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. Materials and equipment Direct labor Overhead (applied) Job 27 Highlands Mall $17,625 15,000 6,000 Job 33 Pine Ridge Estates $ 54,000 27,000 10,800 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. Job Materials and equipment Direct labor (wages payable) 27 $4,500 6,000 33 $6,300 8,250 34 35 $6,100 $4,400 7,400 3, 100 Other May Events 1. Received $14,000 payment on Job 24 delivered to customer in April. 2. Purchased materials and equipment for $10,900 on account. 3. Billed Pine Ridge Estates $145,000 and received payment for $140,000 of that amount. 4. Determined that payroll for indirect labor personnel totaled $800. 5. Issued supplies and incidental materials for current jobs costing $305. 6. Recorded overhead and advertising costs for the operation as follows (all cash except equipment depreciation). Property taxes Storage area rental Truck and delivery cost Advertising and promotion campaign Inspections Telephone and other miscellaneous Equipment depreciation $700 825 470 750 350 475 600 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