Answer:
3-Jul
Dr Work in process 25,500
Cr Salaries payable 25,500
10-Jul
Dr Work in process 12,500
Cr Cash 12,500
14-Jul
Dr Work in process 48,100
Cr Salaries payable 48,100
18-Jul
Dr Work in process 30,000
Cr Consultant fees payable 30,000
27-Jul
Dr Work in process 26,660
Cr Office overhead 26,660
31-Jul
Dr Office overhead 28,500
Cr Cash 28,500
31-Jul
Dr office overhead 4,000
Cr Supplies 4,000
31-Jul
Dr Salaries payable 74,350
Cr Cash 74,350
31-Jul
Dr Accounts receivable 172,500
Cr Fees earned 172,500
31-Jul
Dr Cost of services 142,760
Cr Work in process 142,760
b. $5,840 Over applied
c. Gross profit $35,580
Explanation:
Furlar and Benson General Journal
3-Jul
Dr Work in process 25,500
(170 hours ×150 per hour)
Cr Salaries payable 25,500
10-Jul
Dr Work in process 12,500
Cr Cash 12,500
14-Jul
Dr Work in process 48,100
(260 hours ×185 per hour)
Cr Salaries payable 48,100
18-Jul
Dr Work in process 30,000
Cr Consultant fees payable 30,000
27-Jul
Dr Work in process 26,660
(170 hours +260 hours)*62
Cr Office overhead 26,660
31-Jul
Dr Office overhead 28,500
Cr Cash 28,500
31-Jul
Dr office overhead 4,000
Cr Supplies 4,000
31-Jul
Dr Salaries payable 74,350
Cr Cash 74,350
31-Jul
Dr Accounts receivable 172,500
Cr Fees earned 172,500
31-Jul
Dr Cost of services 142,760
(25,500+12,500+48,100+30,000+26,660)
Cr Work in process 142,760
b. Calculation for how much office overhead isover- or underapplied
(28,500+4,000)-26,660
=32,500-26,660
=$5,840
Therefore the office overhead is over applied with $5,840
C. Calculation to Determine the gross profit on the Obsidian case
Fees earned 172,500
Less Cost of services (136,920)
(142,760-5,840)
Gross profit $35,580
Therefore the gross profit on the Obsidian case, assuming that over- or underapplied office overhead is closed monthly to cost of services will be $35,580
