Olson Corporation constructs new homes.Assume that Olson uses a job costing system.During May of the current year, the following transactions occurred: Olson purchased $4,500 of lumber on account.
Olson used $3,750 of lumber in production and incurred 50 hours of direct labor hours at $15 per hour.
Depreciation of $1,500 on equipment used to build new houses was recorded.
A house that was completed last period at a cost of $150,000 was sold for $180,000 in cash
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The journal entry to record labor for Olson would include a
A) debit to Finished Goods of $750.
B) debit to Wages Payable of $750.
C) credit to Finished Goods of $750.
D) debit to Work-in-Process of $750.

Question

Olson Corporation constructs new homes.Assume that Olson uses a job costing system.During May of the current year, the following transactions occurred: Olson purchased $4,500 of lumber on account.
Olson used $3,750 of lumber in production and incurred 50 hours of direct labor hours at $15 per hour.
Depreciation of $1,500 on equipment used to build new houses was recorded.
A house that was completed last period at a cost of $150,000 was sold for $180,000 in cash
- 
The journal entry to record labor for Olson would include a
A) debit to Finished Goods of $750.
B) debit to Wages Payable of $750.
C) credit to Finished Goods of $750.
D) debit to Work-in-Process of $750.

Quizplus · Accepted Answer

SUPPORTING CALCULATIONS:
Labor is recorded as a debit to Work-in-Process: $15 × 50 = $750

Olson Corporation Constructs New Homes