Problem:
Shown below are the job cost related accounts for the law firm of Jack, Bob, and Will and their manufacturing equivalents:
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Law Finn Accounts
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Manufacturing Finn Accounts
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Supplies
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Raw Materials
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Salaries and Wages Payable
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Factory Wages Payable
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Operating Overhead
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Manufacturing Overhead
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Service Contracts in Process
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Work in Process
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Cost of Completed Service Contracts
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Cost of Goods Sold
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Cost data for the month of March follow.
1. Purchased supplies on account $1,500.
2. Issued supplies $1,200 (60% direct and 40% indirect).
3. Assigned labor costs based on time cards for the month which indicated labor costs of $60,000 (80% direct and 20% indirect).
4. Operating overhead costs incurred for cash totaled $40,000.
5. Operating overhead is applied at a rate of 90% of direct attorney cost.
6. Work completed totaled $75,000.
Instructions
(a) Journalize the transactions for March. (Omit explanations.)
(b) Determine the balance of the Service Contracts in Process account. (Use a T-account.)