PA 12 - The journal entry to record this transaction would include...

E. Indirect labor incurred $ 50

Question

PA 12 - The journal entry to record this transaction would include...

E. Indirect labor incurred    $    50

BlackTom AI · Accepted Answer

Indirect labor is a component of manufacturing overhead, so the incurred amount is recorded by debiting the Manufacturing Overhead account.

1. Relevant knowledge points and concepts
- Indirect labor (supervisors, maintenance, janitorial in a factory) cannot be directly traced to a specific job or product; therefore it is classified as manufacturing overhead (MOH), not direct labor.  
- Actual overhead costs incurred are recorded by debiting the Manufacturing Overhead account. The corresponding credit is usually to Wages Payable (if unpaid) or Cash (if paid). Debits increase expense or overhead accounts; credits increase liabilities or decrease assets.

2. Reasoning process step by step
- Identify the cost type: the line states "Indirect labor incurred $50" → cost is indirect manufacturing labor.  
- Determine the accounts affected: MOH must be increased (to accumulate actual overhead), and a liability (Wages Payable) or asset (Cash) must be decreased/increased depending on payment. "Incurred" typically implies wages payable.  
- Determine debit/credit: increase MOH (debit), increase Wages Payable (credit).

3. Intermediate steps / calculation
- Amount to record = $50.  
- Debit Manufacturing Overhead $50 (to record incurred overhead).  
- Credit Wages Payable $50 (to record the obligation to pay those wages).

Journal entry:
Debit Manufacturing Overhead $50
Credit Wages Payable $50

4. Why the correct answer is correct
Because indirect labor is a manufacturing overhead cost, the proper accounting treatment is to record it in the Manufacturing Overhead account. Recording it elsewhere would not correctly accumulate overhead for later allocation to Work in Process.

5. Why other possible answers would be incorrect
- Debiting Work in Process (Direct Labor) would be correct only for direct labor costs traceable to specific jobs; indirect labor is not traceable.  
- Debiting Administrative or Selling Expense would misclassify a factory cost as period expense.  
- Crediting Cash instead of Wages Payable is only correct if the wages were paid immediately; "incurred" implies the liability form.

6. Conclusion
The correct journal entry debits Manufacturing Overhead for $50, matching the provided answer: Debit: Manufacturing Overhead.

PA 12 - The journal entry to record this transaction would include... E. Indirect labor incurred $ 50 单项选择题

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