Penn Company Uses a Job Order Cost Accounting System

question 143

Multiple Choice

Penn Company uses a job order cost accounting system. In the last month, the system accumulated labor time tickets totaling $24,600 for direct labor and $4,300 for indirect labor. These costs were accumulated in Factory Payroll as they were paid. Which entry should Penn make to assign the Factory Payroll?

• A) Debit Payroll Expense $28,900; credit Cash $28,900.
• B) Debit Payroll Expense $24,600; debit Factory Overhead $4,300; credit Factory Payroll $28,900.
• C) Debit Goods in Process Inventory $24,600; debit Factory Overhead $4,300; credit Factory Payroll $28,900.
• D) Debit Goods in Process Inventory $24,600; debit Factory Overhead $4,300; credit Wages Payable $28,900.
• E) Debit Goods in Process Inventory $28,900; credit Factory Payroll $28,900.

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Definitions:

Service Revenue

Income earned from the provision of services as opposed to the sale of physical goods.

Cash Received

Money that has been transferred into a company or individual's possession as payment for goods or services.

Cash Deposit

Funds placed in a financial institution for safekeeping, which can include cash or cash equivalents.

Liability Reported

The representation of an entity's obligations or debts on its financial statements, indicating amounts owed to creditors.