Question: The law firm of Clark and Lankau accumulates costs associated

The law firm of Clark and Lankau accumulates costs associated with individual cases, using a job order cost system. The following transactions occurred during May:
May 2. Charged 200 hours of professional (lawyer) time to the Peterson Co. breech of contract suit to prepare for the trial, at a rate of $ 140 per hour.
7. Reimbursed travel costs to employees for depositions related to the Peterson case, $ 14,600.
11. Charged 300 hours of professional time for the Peterson trial at a rate of $ 175 per hour.
16. Received invoice from consultants Davis and Harris for $ 40,000 for expert testimony related to the Peterson trial.
21. Applied office overhead at a rate of $ 50 per professional hour charged to the Peterson case.
31. Paid secretarial and administrative salaries of $ 26,000 for the month.
31. Used office supplies for the month, $ 6,000.
31. Paid professional salaries of $ 38,640 for the month. 31. Billed Peterson $ 185,000 for successful defense of the case.
a. Provide the journal entries for each of the above transactions.
b. How much office overhead is over- or underapplied?
c. Determine the gross profit on the Peterson case, assuming that over- or underapplied office overhead is closed monthly to cost of services.

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  • CreatedJune 27, 2014
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