Question

Juarez builders incurred $285,000 of labor costs for construction jobs completed during the month of august, of which $212,000 was direct and $73,000 was indirect supervisory costs. the correct journal entry to record the direct labor for the month is: debit work in process inventory $212,000; credit cash $285,000. debit work in process inventory $212,000; credit factory wages payable $212,000. debit factory wages $285,000; credit factory wages payable $285,000. debit payroll expense $212,000; credit cash $212,000. debit factory wages payable $285,000; credit work in process inventory $212,000.

Answer 1

The answer is

debit work in process inventory $212,000; credit factory wages payable $212,000.

Answer 2

The answer is:

Debit Work in process inventory $212, 000

Credit Factory wages payable $212, 000

Step-by-step explanation:

Direct labour costs are the labour costs that vary in proportion to the quantity of production whereas indirect labour costs do not vary with production. Owing to this, the direct labour costs are added to the Work in Process account directly while the indirect labour costs are added to the manufacturing overhead costs account. At the end of the work week, the pay rate per hour of labour worked is calculated. Then the direct and indirect labour rates are multiplied by the direct and indirect labour hours worked respectively. This amount is then posted to a Wages Payable account to reflect the amount owing to the workers. Therefore the correct entries to reflect this would be:

Journal Entry 1:

Debit Work in process inventory $212, 000

Debit Factory overhead $73, 000

Credit Factory wages payable $285,000

Journal Entry 2:

Debit Factory wages payable $285, 000

Credit Cash $285, 000