Portside Watercraft uses a job order costing system.During one month Portside purchased $173,000 of raw materials on credit; issued materials to production of $164,000,of which $24,000 were indirect.Portside incurred a factory payroll cost of $95,000,of which $25,000 was indirect labor.Portside uses a predetermined overhead rate of 170% of direct labor cost.
-The journal entry to record the allocation of factory wages to production is:
A)Debit Work in Process Inventory $95,000; credit Factory Wages Payable $95,000.
B)Debit Work in Process Inventory $95,000; credit Cash $95,000.
C)Debit Factory Wages Payable $95,000; credit Cash $95,000.
D)Debit Work in Process Inventory $70,000; debit Factory Overhead $25,000; credit Factory Wages Payable $95,000.
E)Debit Work in Process Inventory $70,000; debit Factory Overhead $25,000; credit Cash $95,000.

Question

Quizplus · Accepted Answer

The correct journal entry to record the allocation of factory wages to production in a job order costing system includes debiting Work in Process Inventory for the direct labor cost and the applicable indirect labor cost to the production jobs, and debiting the Factory Overhead account for the remaining indirect labor cost. Finally, the Factory Wages Payable account is credited for the total factory wages amount. Therefore, option D is the correct choice.

Portside Watercraft Uses a Job Order Costing System