Final answer:
The General Ledger records the allocation of labor costs from the labor distribution summary by making entries that typically credit a payroll-related account and debit department or project expense accounts to reflect labor usage.
Step-by-step explanation:
When the General Ledger (GL) makes accounting entries from the labor distribution summary, it records the allocation of labor costs to various accounts or cost centers within a business. This process typically involves crediting a labor or payroll expenses account and debiting various departmental expense accounts or project accounts to reflect where the labor was actually used.
An example entry might be a credit to 'Wages Payable' and a corresponding debit to 'Manufacturing Labor Expense' for a factory worker's time spent on the production line.
This is done to record the labor cost incurred during a specific period and the liability owed to employees for their compensation. Another entry is to debit the Employee Payable account and credit the Cash account when the employees are paid. This acknowledges the discharge of the liability and reduces the cash account accordingly.