The law firm of Furlan and Benson accumulates costs associated with individual cases, using a job order cost system. The following transactions occurred during July: July 3 Charged 175 hours of professional (lawyer) time at a rate of $150 per hour to the Obsidian Co. breech of contract suit to prepare for the trial.
10 Reimbursed travel costs to employees for depositions related to the Obsidian case, $12,500.
14 Charged 260 hours of professional time for the Obsidian trial at a rate of $185 per hour.
18 Received invoice from consultants Wadsley and Harden for $30,000 for expert testimony related to the
Obsidian trial.
27 Applied office overhead at a rate of $62 per professional hour charged to the Obsidian case.
31 Paid administrative and support salaries of $28,500 for the month.
31 Used office supplies for the month, $4,000 31. Paid professional salaries of $74,350 for the month.
31 Billed Obsidian $172,500 for successful defense of the case
A. Provide the journal entries for each of these transactions.
B. How much office overhead isover- or underapplied?
C. Determine the gross profit onthe Obsidian case, assuming that over- or underapplied officeoverhead is closed monthly to cost of services.
Chart Of Accounts Furlan and Benson General Ledger
Assets
110 Cash
121 Accounts Receivable
125 Notes Receivable
126 Interest Receivable
132 Work in Process
133 Office Overhead
141 Supplies
142 Prepaid Insurance
143 Prepaid Expenses
191 Office Equipment
192 Accumulated Depreciation-OfficeEquipment
Liabilities
210 Accounts Payable
221 Utilities Payable
231 Notes Payable
236 Interest Payable
241 Lease Payable
251 Salaries Payable
252 Consultant Fees Payable
Equity
311 Common Stock
340 Retained Earnings
351 Dividends
390 Income Summary
Revenue
410 Fees Earned
610 Interest Revenue
Expenses
510 Cost of Services
520 Salaries Expense
532 Insurance Expense
533 Utilities Expense
534 Office Supplies Expense
540 Administrative Expenses
560 Depreciation Expense-OfficeEquipment
590 Miscellaneous Expense
710 Interest Expense