Jacob Company incurred $7,000 for indirect labor in Department III. The journal entry to record indirect labor utilized is:
A)debit Manufacturing Overhead, $7,000; credit Accounts Payable, $7,000.
B)debit Accounts Payable, $7,000; credit Manufacturing Overhead, $7,000.
C)debit Manufacturing Overhead, $7,000; credit Wages Payable, $7,000.
D)debit Wages Payable, $7,000; credit Manufacturing Overhead, $7,000.

Question

Quizplus · Accepted Answer

When indirect labor is used in production, it is recorded as a manufacturing overhead cost. Therefore, the account debited should be Manufacturing Overhead, not Accounts Payable or Wages Payable. The credit entry should not be to Accounts Payable as it is an indirect cost and not a direct labor cost. Therefore, the correct journal entry is to debit Manufacturing Overhead and credit Wages Payable.

Jacob Company Incurred $7,000 for Indirect Labor in Department III