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:

Question

Quizplus · Accepted Answer

The direct labor costs should be debited to Work in Process Inventory, as it represents the cost of producing goods. The total direct labor cost incurred during the month was $212,000, which should be credited to Factory Wages Payable, as it represents the liability to pay employees for their work. Therefore, the correct journal entry is:

Debit Work in Process Inventory $212,000 
Credit Factory Wages Payable $212,000

Juarez Builders Incurred $285,000 of Labor Costs for Construction Jobs