Question

Prepare journal entries to record the following production activities.

a. Incurred $75,000 of direct labor in production (credit Factory Payroll Payable).
b. Incurred $20,000 of indirect labor in production (credit Factory Payroll Payable).
c. Paid factory payroll.

Answer 1

1.Dr Work in progress inventory75,000

Dr Payable Factory payroll 75,000

2. Dr Factory overhead 20,000

Cr Factory Payroll Payable 20,000

3. Dr Factory wages payable 95,000

(75,000+20,000)

Cr Cash 95,000

Step-by-step explanation:

Preparation to record Journal entry

1. Since the amount of $75,000 was been Incurred of the direct labour production this means we have to record the transaction as :

Dr Work in progress inventory75,000

Dr Payable Factory payroll 75,000

2. Since the amount of $20,000 was Incurred of indirect labor in production this means we have to record the transaction as:

Dr Factory overhead 20,000

Cr Factory Payroll Payable 20,000

3. Since factory payroll was paid the transaction will be recorded as :

Dr Factory wages payable 95,000

(75,000+20,000)

Cr Cash 95,000