The law firm of Furlan and Benson accumulates costs associated with individual cases, using a job order cost system. The following transactions occurred during July:

Jul.	3	Charged 175 hours of professional (lawyer) time at a rate of $150 per hour to the Obsidian Co. breech of contract suit to prepare for the trial
	10	Reimbursed travel costs to employees for depositions related to the Obsidian case, $12,850
	14	Charged 260 hours of professional time for the Obsidian trial at a rate of $180 per hour
	18	Received invoice from consultants Wadsley and Harden for $29,000 for expert testimony related to the Obsidian trial
	27	Applied office overhead at a rate of $60 per professional hour charged to the Obsidian case
	31	Paid administrative and support salaries of $29,240 for the month
	31	Used office supplies for the month, $4,390
	31	Paid professional salaries of $73,050 for the month
	31	Billed Obsidian $181,400 for successful defense of the case

Required:

A.	Provide the journal entries for each of these transactions. Refer to the Chart of Accounts for exact wording of account titles.
B.	How much office overhead is over- or underapplied?
C.	Determine the gross profit on the Obsidian case, assuming that over- or underapplied office overhead is closed monthly to cost of services.

Chart of Accounts

CHART OF ACCOUNTS

Furlan and Benson

General Ledger

	ASSETS
110	Cash
121	Accounts Receivable
125	Notes Receivable
126	Interest Receivable
132	Work in Process
133	Office Overhead
141	Supplies
142	Prepaid Insurance
143	Prepaid Expenses
191	Office Equipment
192	Accumulated Depreciation-Office Equipment

	LIABILITIES
210	Accounts Payable
221	Utilities Payable
231	Notes Payable
236	Interest Payable
241	Lease Payable
251	Salaries Payable
252	Consultant Fees Payable

	EQUITY
311	Common Stock
340	Retained Earnings
351	Dividends
390	Income Summary

	REVENUE
410	Fees Earned
610	Interest Revenue

	EXPENSES
510	Cost of Services
520	Salaries Expense
532	Insurance Expense
533	Utilities Expense
534	Office Supplies Expense
540	Administrative Expenses
560	Depreciation Expense-Office Equipment
590	Miscellaneous Expense
710	Interest Expense

Journal

A. Provide the journal entries for each of these transactions. Refer to the Chart of Accounts for exact wording of account titles.

PAGE 10

JOURNAL

ACCOUNTING EQUATION

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT	ASSETS	LIABILITIES	EQUITY
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20

Final Question

B. How much office overhead is over- or underapplied?

C. Determine the gross profit on the Obsidian case, assuming that over- or underapplied office overhead is closed monthly to cost of services.