Question

The net earnings of the factory workers for Larkin Company during the month of January are $72,000. The employer’s payroll taxes for the factory payroll are $8,100. The fringe benefits to be paid by the employer on this payroll are $4,300. Of the total accumulated cost of factory labor, 84% is related to direct labor and 16% 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 factory labor to production.

Answer 1

Answer:

fringe benefit expense   4,300

Wages expense            72,000

Payroll tax expense        8, 100

            Cash                                 84,400

Work In Process           70,896‬

Factory Overhead         13,504

     Fringe benefit expense   4,300

     Wages expense             72,000

     Payroll tax expense         8, 100

Explanation:

The first entry will be the payment to the employees wages, benefit and payroll taxes.

Then, in the second entry we will capitalize this expenses into the WIP for the amount of direct labor.

And, into actual overhead for the amount of indirect labor.