Question

Job order cost accounting for a service company

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:

July 3.	Charged 570 hours of professional (lawyer) time at a rate of $240 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, $28,100
14.	Charged 280 hours of professional time for the Obsidian trial at a rate of $260 per hour
18.	Received invoice from consultants Wadsley and Harden for $51,800 for expert testimony related to the Obsidian trial
27.	Applied office overhead at a rate of $70 per professional hour charged to the Obsidian case
31.	Paid administrative and support salaries of $42,200 for the month
31.	Used office supplies for the month, $14,300
31.	Paid professional salaries of $160,100 for the month
31.	Billed Obsidian $397,900 for successful defense of the case

a. Provide the journal entries for each of these transactions.

Answer 1

Answer
Date	Account titles and explanation	Debit	Credit
Jul-03	Work in Process (620 hrs. × $160)	$     136,800		570*240
	Salaries Payable		$       13,680
Jul-10	Work in Process	$       28,100
	Cash		$       28,100
Jul-14	Work in Process (130 hrs. × $270)	$       72,800		280*260
	Salaries Payable		$       72,800
Jul-18	Work in Process	$       51,800
	Consultant Fees Payable		$       51,800
Jul-27	Work in Process ((620+130) hrs. × $70)	$       59,500		(570+280)*70
	Office Overhead		$       59,500
Jul-31	Office Overhead	$       42,200
	Cash		$       42,200
Jul-31	Office Overhead	$       14,300
	Supplies		$       14,300
Jul-31	Salaries Payable	$     160,100
	Cash		$     160,100
Jul-31	Accounts Receivable	$     397,900
	Fees Earned		$     397,900
Jul-31	Cost of Services	$     349,000
	Work in Process		$     349,000
136800+28100+72800+51800+59500=349000