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Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094

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Section
BuyFindarrow_forward

Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094
Textbook Problem

Entry for factory labor costs

The weekly time tickets indicate the following distribution of labor hours for three direct labor employees:

images

The direct labor rate earned per hour by the three employees is as follows:

Tom Couro $ 32
David Clancy 36
Jose Cano 28

The process improvement category includes training, quality improvement, and other indirect tasks.

a. Journalize the entry to record the factory labor costs for the week.

b. Assume that Jobs 301 and 302 were completed but not sold during the week and that Job 303 remained incomplete at the end of the week. How would the direct labor costs for all three jobs be reflected on the financial statements at the end of the week?

(a)

To determine

Direct labor cost

The employees working on particular job use time ticket to record the work done by them with respect to a particular job. The summary of time tickets is used for calculating direct labor cost for a particular job.

To record: journal entry the factory labor costs for the week

Explanation

The journal entry for labor costs is prepared as follows:

Date Account titles and Explanation Debit
($)
Credit
($)
  Work in process                    Table (2) 3,676  
  Factory overhead                  Table (2) 164  
      Wages Payable   3,840
  (Record factory labor cost of Job)    

Table (1)

Working note:

(b)

To determine

To explain: the presentation of direct labor costs for three jobs on the financial statements at the end of the week.

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