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:
A)Debit Payroll Expense $212,000; credit Cash $212,000.
B)Debit Factory Wages Payable $285,000; credit Work in Process Inventory $212,000.
C)Debit Work in Process Inventory $212,000; credit Cash $285,000.
D)Debit Work in Process Inventory $285,000; credit Factory Wages Payable $285,000.
E)Debit Work in Process Inventory $212,000; credit Factory Wages Payable $212,000.

Question

Quizplus · Accepted Answer

The direct labor costs should be recorded in the Work in Process Inventory account as a debit, and the Factory Wages Payable account (representing the amount owed to the employees) should be credited for the same amount. Therefore, the correct journal entry is Debit Work in Process Inventory $212,000; credit Factory Wages Payable $212,000. Option E is the only choice that matches this entry.

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