Floyd’s Auto Repair Shop uses a job order cost system to track the cost of each repair. Floyd’s applies its garage or shop overhead at a rate of $20 per direct labor hour spent on each repair.

Floyd’s uses the following accounts to track the cost of all repairs:

The following transactions occurred during the most recent month:
(a) Purchased raw materials (parts and supplies) on account $16,000.
(b) Used $14,000 in raw materials (parts and supplies). Of this, $10,000 was for major parts that were traceable to individual repair jobs, and the remainder was for incidental supplies such as lubricants, rags, fuel, and so on.
(c) Recorded a total of $12,000 in direct labor cost (for 500 hours) that are owed but not yet paid.
(d) Applied overhead to repair jobs at a rate of $20 per direct labor hour.
(e) Recorded the following actual overhead costs:
Rent on garage (pre-paid in the prior month) ... .$8,000
Depreciation on repair equipment ........ 2,500
Garage supervisor’s salary (owed but not yet paid) . 4,000

(f) Completed repair jobs costing $40,000 and charged customers at cost plus an additional 30 percent.

Required:
Prepare journal entries for transactions (a)–(f) using the account names shown and other appropriate accounts such as Cash, Payables, Accumulated Depreciation, Prepaid, and SalesRevenue.

Transcribed Image Text:

Raw Materials (parts and supplics) Repair Jobs in Process Cost of Repairs Completed and Sold Garage/Shop* Overhead Costs