Question

Altec Designs makes fashion clothing and reports the following data for the month of September:

Salaries paid to seamstresses

$140,000

Wages paid to fabric cutters

20,000

Indirect wages

5000

What is the journal entry to record the total labor charges incurred during September, which will be paid at a later date?

a
Work-in-Process Inventory 160,000 Manufacturing Overhead 5000 Wages Payable 165,000
b
Manufacturing Overhead 165,000 Wages Payable 165,000
c
Work-in-Process Inventory 165,000 Wages Payable 165,000
d
Wages Payable 165,000 Finished Goods Inventory 145,000 Work-in-Process Inventory 20,000

Answer 1

Ans a Work-in-Process Inventory 160,000 Manufacturing Overhead 5000 Wages Payable 165,000

Direct expenses like Salaries paid to seamstresses and Wages paid to fabric cutters are a part of Work-in-process inventory. Indirect expense like Indirect wages are a part of Manufacturing Overhead.

Expenses are debited and liabilities are credited. So, the Journal Entry is:

Work-in-Process Inventory ......Dr 160,000

Manufacturing Overhead .......Dr 5000

Wages Payable .............Cr 165,000