Figure 5 - 3 Robinson Corporation constructs new homes. Assume that Robinson uses a job costing system. During July 2014, the following transactions occurred:
Robinson purchased $4,500 of lumber on account.
Robinson 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.
Refer to Figure 5-3. The journal entry to record labor for Robinson would include a

Question

Quizplus · Accepted Answer

The journal entry to record direct labor in a job costing system is a debit to Work-in-Process (the inventory account that tracks the cost of direct materials, direct labor, and manufacturing overhead applied to a specific job) and a credit to Wages Payable (the liability account that tracks the amount of direct labor cost to be paid to employees). Therefore, the journal entry to record the 50 hours of direct labor at $15 per hour is a debit to Work-in-Process for $750 and a credit to Wages Payable for $750. The other options are not correct because there is no finished goods inventory or sale transaction involved in this journal entry.

Figure 5 - 3 Robinson Corporation Constructs New Homes