The law firm of Clark and Lankau accumulates costs associated with individual cases, using a job order cost system. The following transactions occurred during May:
May 2. Charged 200 hours of profesional (lawyer) time to the peterson co. breech of conteact suit to prepare for the trial, at a rate of $140 per hour.
May 7. Reimbursed travel costs to employees for depositions related to the Peterson Case, $14,600
May 11. Charged 300 hours of professional time for the Peterson trial at a rate of $175 per hour.
May 16. Received invoice from consultants Davis and Haris for $40,000 for expert testimony related to the Peterson trial.
May 21. Applied office overead at a rate of $50 per professional hour charged to the Peterson case.
May 31. Paid secretrial and administrative salaris of $26,000 for the month.
May 31. Used office supplies for the month, $6000
May 31. Paid professional salaries of $38,640 for the month.
May 31. Billed Peterson $185,000 for successful defense of the case
a. Provide the journal entries for each of the above transactions.
b. How much office overhead is over- or underapplied? Enter your answer as a positive number.
c. Determine the gross profit on the Peterson case, assuming that over- or underapplied office overhead is closed monthly to cost of services.