Service Costing-Journal Entries
Response to the following problem:
Blake Accounting Services has the following transactions. Its beginning work-in-process services account balance is zero.
a. Purchased supplies costing $11,000 on account.
b. Paid property tax, $20,000.
c. Paid rent, $2,000; and utilities, $700.
d. Paid support staff salaries, $35,000.
e. Used supplies costing $9,000.
f. Paid direct labor salaries, $50,000. Average rate was $10 per hour.
g. Applied overhead at $11.50 per direct labor hour.
h. Transferred $100,000 from Work-in-Process to Cost of Services and billed customers for
4,500 hours of work. Blake bills its customers $40 per direct labor hour.
i. Closed under- or overapplied overhead to Cost of Services.
Required:
1. Prepare the journal entries for the above transactions.
2. Determine the ending balance in the work-in-process services account.