The Fly Company provides advertising services for clients across the nation. The Fly Company is presently working on four projects, each for a different client. The Fly Company accumulates costs for each account (client) on the basis of both direct costs and allocated indirect costs. The direct costs include the charged time of professional personnel and media purchases (air time and ad space). Overhead is allocated to each project as a percentage of media purchases. The predetermined overhead rate is 68% of media purchases. On August 1, the four advertising projects had the following accumulated costs: August 1 Balances Vault Bank $261,000 Take Off Airlines 85,000 Sleepy Tired Hotels 208,300 Tastee Beverages 122,300 Total $676,600 During August, The Fly Company incurred the following direct labor and media purchase costs related to preparing advertising for each of the four accounts: Direct Labor Media Purchases Vault Bank $187,000 $717,100 Take Off Airlines 82,000 620,900 Sleepy Tired Hotels 378,000 458,400 Tastee Beverages 415,800 347,900 Total $1,062,800 $2,144,300 At the end of August, both the Vault Bank and Take Off Airlines campaigns were completed. The costs of completed campaigns are debited to the cost of services account. Required: Journalize the four summary entries on August 31 to record each of the following for the month. Refer to the Chart of Accounts for exact wording of account titles. • Direct labor costs • Media purchases • Overhead applied • Completion of Vault Bank and Take Off Airlines campaigns
The Fly Company provides advertising services for clients across the nation. The Fly Company is presently working on four projects, each for a different client. The Fly Company accumulates costs for each account (client) on the basis of both direct costs and allocated indirect costs. The direct costs include the charged time of professional personnel and media purchases (air time and ad space). Overhead is allocated to each project as a percentage of media purchases. The predetermined overhead rate is 68% of media purchases. On August 1, the four advertising projects had the following accumulated costs: August 1 Balances Vault Bank $261,000 Take Off Airlines 85,000 Sleepy Tired Hotels 208,300 Tastee Beverages 122,300 Total $676,600 During August, The Fly Company incurred the following direct labor and media purchase costs related to preparing advertising for each of the four accounts: Direct Labor Media Purchases Vault Bank $187,000 $717,100 Take Off Airlines 82,000 620,900 Sleepy Tired Hotels 378,000 458,400 Tastee Beverages 415,800 347,900 Total $1,062,800 $2,144,300 At the end of August, both the Vault Bank and Take Off Airlines campaigns were completed. The costs of completed campaigns are debited to the cost of services account. Required: Journalize the four summary entries on August 31 to record each of the following for the month. Refer to the Chart of Accounts for exact wording of account titles. • Direct labor costs • Media purchases • Overhead applied • Completion of Vault Bank and Take Off Airlines campaigns
Chapter4: The Adjustment Process
Section: Chapter Questions
Problem 10PA: Prepare journal entries to record the following transactions. Create a T-account for Interest...
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The Fly Company provides advertising services for clients across the nation. The Fly Company is presently working on four projects, each for a different client. The Fly Company accumulates costs for each account (client) on the basis of both direct costs and allocated indirect costs. The direct costs include the charged time of professional personnel and media purchases (air time and ad space). Overhead is allocated to each project as a percentage of media purchases. The predetermined overhead rate is 68% of media purchases.
On August 1, the four advertising projects had the following accumulated costs:
| August 1 Balances | |
| Vault Bank | $261,000 |
| Take Off Airlines | 85,000 |
| Sleepy Tired Hotels | 208,300 |
| Tastee Beverages | 122,300 |
| Total | $676,600 |
During August, The Fly Company incurred the following direct labor and media purchase costs related to preparing advertising for each of the four accounts:
| Direct Labor | Media Purchases | |
| Vault Bank | $187,000 | $717,100 |
| Take Off Airlines | 82,000 | 620,900 |
| Sleepy Tired Hotels | 378,000 | 458,400 |
| Tastee Beverages | 415,800 | 347,900 |
| Total | $1,062,800 | $2,144,300 |
At the end of August, both the Vault Bank and Take Off Airlines campaigns were completed. The costs of completed campaigns are debited to the cost of services account.
Required:
Journalize the four summary entries on August 31 to record each of the following for the month. Refer to the Chart of Accounts for exact wording of account titles.
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Transcribed Image Text:Journalize the four summary entries on Aug. 31 to record each of the following for the month. 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
4
5
6
7
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