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Order Cost Accounting for a Service Company e law firm of Furlan and Benson accumulates costs associated with individual cases, using a job order cost
Order Cost Accounting for a Service Company e law firm of Furlan and Benson accumulates costs associated with individual cases, using a job order cost system. The following transactions occurred uring July: July 3. Charged 560 hours of professional lawyer) time to the Obsidian Co. breech of contract suit to prepare for the trial, at a rate of $150 per hour. 10. Reimbursed travel costs to employees for depositions related to the Obsidian case, $24,200. 14. Charged 120 hours of professional time for the Obsidian trial at a rate of $270 per hour. 18. Received invoice from consultants Wadsley and Harden for $72,300 for expert testimony related to the Obsidian trial 27. Applied office overhead at a rate of $40 per professional hour charged to the Obsidian case. 31. Paid administrative and support salaries of $19,300 for the month. 31. Used office supplies for the month, $6,500. 31. Pald professional salaries of $182,400 for the month. 31. Billed Obsidian $274,500 for successful defense of the case. a. Provide the journal entries for each of these transactions. If an amount box does not require an entry, leave it blank. Work in Process July 3 Salaries Payable Work in Process y 10 Cash Work in Process July 14 Salaries Payable II II II July 18 Consultant Fees Payable Work in Process July 27 Office Overhead July 27 Work in Process Office Overhead July 31 Admin, sal Office Overhead Cash July 31 Supplies Office Overhead Supplies II II II II II OO II II II II II July 31 Prof. sal. Salaries Payable Cash July 31 Billed Accounts Receivable Fees Earned July 31 Cost Cost of Services Work in Process Check My Work a. Record the direct costs in Work in Process Apply the overhead based on professional hours. Record actual overhead in the Office Overhead account. For cases completed, move the costs from Work in Process to Cost of Services b. How much office overhead is over- or underapplied? Enter your answer as a positive number. $ Overapplied c. Determine the gross profit on the Obsidian case, assuming that over or underapplied office overhead is closed monthly to cost of services
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