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The gross earnings of the factory workers for Juan Company during the month of January are...

The gross earnings of the factory workers for Juan Company during the month of January are $61,000. The employer’s payroll taxes for the factory payroll are $9,600. The fringe benefi ts to be paid by the employer on this payroll are $6,400. Of the total accumulated cost of factory labor, 80% is related to direct labor and 20% is attributable to indirect labor. Instructions (a) Prepare the entry to record the factory labor costs for the month of January. (b) Prepare the entry to assign factory labor to production.

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Answer #1
No. Account Titles and Explanation Debit Credit
a. Factory Labor                            [$61,000 + $9,600 + $6,400] $77,000
   Factory wages payable $61,000
   Employer payroll taxes $9,600
   Employer Fringe Benifits $6,400
b. Work in Process Inventory   [Direct labor = $77,000 x 85%] $61,600
Manufacturing Overhead      [Indirect labor = $77,000 x 15%] $15,400
   Factory Labor $77,000
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