Alpha Geek
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Tec Trends Inc. provides advertising services for clients across the nation. Tec Trends is presently working on four projects, each for a different client. Tec Trends accumulates costs for each account (client) on the basis of both direct costs and allocated indirect costs. The direct costs include the charged time of professional personnel and media purchases (air time and ad space). Overhead is allocated to each project as a percentage of media purchases. The predetermined overhead rate is 40% of media purchases. On July 1, the four advertising projects had the following accumulated costs:
|
 |
July 1 Balances |
|
Spitzer Hotel |
$120,000 |
|
Gonzalez Bank |
15,000 |
|
Gulliani Beverage |
66,000 |
|
Koch Rentals |
18,000 |
During July, Tec Trends Inc. incurred the following direct labor and media purchase costs related to preparing advertising for each of the four accounts:
|
 |
Direct Labor |
Media Purchases |
|
Spitzer Hotel |
$ 42,000 |
$154,000 |
|
Gonzalez Bank |
17,000 |
143,000 |
|
Gulliani Beverage |
81,000 |
128,000 |
|
Koch Rentals |
107,000 |
83,000 |
|
Total |
$247,000 |
$508,000 |
At the end of July, both the Spitzer Hotel and Gonzalez Bank campaigns were completed. The costs of completed campaigns are debited to the cost of services account.
Journalize the summary entry to record each of the following for the month:
a. Direct labor costs
b. Media purchases
c. Overhead applied
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d. Completion of Spitzer Hotel and Gonzalez Bank campaigns