The gross earnings of the factory workers for Larkin Company during the month of
ID: 2460863 • Letter: T
Question
The gross earnings of the factory workers for Larkin Company during the month of January are $76,000. The employer's payroll taxes for the factory payroll are $8,000. The fringe benefits to be paid by the employer on this payroll are $6,000. Of the total accumulated cost of factory labor, 85% is related to direct labor and 15% is attributable to indirect labor.
a. Prepare the entry to record the factory labor costs for the month of January
b. Prepare the entry to assign the factory labor to production.
Explanation / Answer
a) Factory wages payable + employer payroll taxes payable + employer fringe benefits payable.
Adding all three = Factory labor
Factory labor debit 90,000
Factory wages payable credit 76000
Employer payroll taxes payable credit 8,000
Employer fringe benefits payable credit 6,000
b)
The entry to assign factory labor to production is the following:
Work in process inventory 76500 or 85% direct labor debit.
Manufacturing overhead 13500 or 15% indirect labor Debit.
Factory labor 90,000 CR.
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