Question

The gross earnings of the factory workers for Larkin Company during the month of January are $91,000. The employer's payroll taxes for the factory payroll are $7,700. The fringe benefits to be paid by the employer on this payroll are $5,100. 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

Step-by-step explanation:

The journal entry is shown below:

(a) Factory Labor/Expenses A/c Dr $103,800

To Factory wages payable $91,000

To Employer payroll taxes payable $7,700

To Fringe benefits payable $5,100

(Being labor expenses are recorded)

(b) Direct labor A/c Dr $87192 ($103,800 × 84%)

Indirect labor A/c Dr $16,608 ($103,800 × 16%)

To Factory Labor $103,800

(Being factor labor is assigned)