Tax Services, Inc., provides tax accounting services and began operations on February 1. It began jobs 1 through 4 during the first half of February. The following transactions occurred that week.

1. Purchased supplies on account totaling $6,000

2. Used supplies totaling $3,200 for various jobs

3. Processed time-sheets showing the following:

4. Applied overhead using a predetermined rate of 120 percent of direct labor cost.

5. Completed jobs 1 and 2 and billed the customer $20,000 and $21,000, respectively. 

Required:

a. Calculate the costs incurred in February for each of the four jobs.

b. Make the appropriate journal entry for each item described previously. Assume all payments will be made next month.

c. How much gross profit did Tax Services, Inc., earn from job 1 and job 2? 

d. What is the amount of work in process at the end of the first half of February?

Transcribed Image Text:

Job 1, direct labor (200 hours) Job 2, direct labor (240 hours) Job 3, direct labor (40 hours) Job 4, direct labor (15 hours) Indirect labor 6,000 6,800 2,200 350 3,600 $ 18,950 Total