Problem: (Comprehensive) Jackson Construction Company uses a job order costing system. In May 2008, Jackson made a $1,650,000 bid to build a pedestrian overpass over the beach highway in Gulfport, Mississippi. Jackson Construction won the bid and assigned #515 to the project. Its completion date was set at December 15, 2008. The following costs were estimated for completion of the overpass: $620,000 for direct material, $335,000 for direct labor, and $201,000 for overhead.
During July, direct material cost assigned to Job #515 was $60,900, and direct labor cost associated with it was $87,520/ The firm uses a predetermined OH rate of 60 percent of direct labor cost. Jackson Construction also worked on several other jobs during July and incurred the following costs:
Direct material (including job #515) $289,650
Direct labor (including job #515) 292,000
Indirect labor 27,900
Administrative salaries and wages 19,800
Depreciation on construction equipment 13,200
Depreciation on office equipment 3,900
Client entertainment (on accounts payable) 5,550
Advertising for firm (paid in cash) 3,300
Indirect material (from supplies inventory) 9,300
Miscellaneous expenses (design related;
to be paid in the following month) 5,100
Accrued utilities (for office, $900; for construction, 3,600
$2,700)
During July, Jackson Construction completed several jobs that had been in process before the beginning of the month. These completed jobs generated $612,000 of revenues for the company. The related job cost sheets showed costs associated with those jobs of $414,500. At the beginning of July, Jackson Construction had Work in Process Inventory of $435,900.
1) Prepare a job order cost sheet for Job #515, including all job details, and post the appropriate cost information for July.
2) Prepare journal entries for the preceding information.
3) Prepare a Cost of Goods Manufactured Schedule for July for Jackson Construction Company.
4) Assuming that the company pays income tax at a 40 percent rate, prepare an income statement for Jackson Construction Company.