Kalogrides & McMillan CPAs incurred the following costs in performing audits during September 2010. The firm uses a Work in Process Inventory account for audit engagement costs and records overhead in fixed and variable overhead accounts.
a. Prepare journal entries for each of the following transactions:
?c Used $5,000 of previously purchased supplies on audit engagements.
?c Paid $8,000 of partner travel expenses to an accounting conference.
?c Recorded $6,500 of depreciation on laptops used in audits.
?c Recorded $1,800,000 of annual depreciation on the Kalogrides & McMillan Building, located in downtown New York; 65 percent of the space is used to house audit personnel.
?c Accrued audit partner salaries, $200,000.
?c Accrued remaining audit staff salaries, $257,900.
?c Paid credit card charges for travel costs for client engagements, $19,400.
?c One month’s prepaid insurance and property taxes expired on the downtown building, $17,300.
?c Accrued $3,400 of office assistant wages; the office assistant works only for the audit partners and staff.
?c Paid all accrued salaries and wages for the month.
b. Determine the cost of audit services rendered for September 2010.