would like help with the journal entries, and not sure how to check the overhead

Question

would like help with the journal entries, and not sure how to check the overhead and gross profit from the case

Chart of Accounts Instructions The law occurred during July: firm of Furlan and Benson accumulates costs associated with individual cases, using a job order cost system. The following transactions Jul. 3 Charged 175 hours of professional (lawyer) time to the Obsidian Co. breech of contract suit to for the trial, at a rate of $150 per hour. 10 Reimbursed travel costs to employees for depositions related to the Obsidian case, $12,500 14 Charged 260 hours of professional time for the Obsidian trial at a rate of $185 per hou 18 Received invoice from consultants Wadsley and Harden for $30,000 for expert testimony related to the 27 31 31 Obsidian trial. Applied office overhead at a rate of $62 per professional hour charged to the Obsidian case. Paid administrative and support salaries of $28,500 for the month. Used office supplies for the month, $4,000. 27 PM 6/14/2018

Explanation / Answer

The journal entries are provided below:

Explanation:

26250 = 1758150 (3rd July)

Work in process = 260*185 = 48,100 (14th July)

Work in process = 62*(175+260) = 26,970 (27th July)

Cost of services = 26250+12500+48100+30000+26970 = 143820 (31st July)

B. Applied office overhead = 26,970 (i.e. 62*(175+260))

Actual office overhead = administrative salary+office supply = 28,500+4,000 = $32,500

Difference = 32500-26970 = $5530. As actual overhead>applied overhead is underapplied.

Hence the answer is $5,530 (underapplied)

C. Gross profit = Fees earned - cost of services - underapplied office overhead

= 172,500 - 143,820 - 5,530

= $23,150

Date Particulars Debit Credit 3-Jul Work in process 26,250.00 Salaries payable 26,250.00 10-Jul Work in process 12,500.00 Cash 12,500.00 14-Jul Work in process 48,100.00 Salaries payable 48,100.00 18-Jul Work in process 30,000.00 Consultant fees payable 30,000.00 27-Jul Work in process 26,970.00 Office overhead 26,970.00 31-Jul Office overhead 28,500.00 Cash 28,500.00 31-Jul Office overhead 4,000.00 Supplies 4,000.00 31-Jul Salaries payable 74,350.00 Cash 74,350.00 31-Jul Accounts receivable 172,500.00 Fees eraned 172,500.00 31-Jul Cost of services 143,820.00 Work in process 143,820.00

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