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

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:

Quizplus · Accepted Answer

Direct labor costs should be recorded in the Work in Process Inventory account, which is a part of the inventory valuation. Indirect supervisory costs are not included in the inventory valuation but are part of the manufacturing overhead. Therefore, the correct journal entry is to debit Work in Process Inventory for the portion of direct labor costs incurred, which is $212,000, and credit Factory Wages Payable for the same amount. The other options are incorrect because they do not accurately reflect the nature of the costs or account for the distinction between direct and indirect labor costs.

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