The Maryland Company is a computer repair shop and had the following transactions and events during the year. Estimated overhead for the year was $175,000; estimated labor for the year was 6,000 hours.
a. Purchased materials on account, $126,000.
b. Traced materials to repair jobs $110,880; general shop materials used $9,500.
c. Labor traced to repair jobs $165,000, untraced labor was $22,220.
d. Overhead incurred (not including materials or labor): $139,600.
e. Overhead is applied to repair jobs based on labor hours. All workers were paid $30/hr.
f. Ending work-in-process consisted of one repair job with a cost of $1,976.
There was no beginning work-in-process.
g. Repair jobs were billed to the customers for $476,000.
Required:
1) Prepare the journal entries to record the transactions for the year.
2) Prepare the journal entries to write-off the over or under applied overhead to the cost of repair jobs.
3) What would Maryland's operating profit for the year?