The consulting firm of Tilton and Henderson accumulates costs associated with individual cases, using a job order cost system. The following transactions occurred during June:
June 4. Charged 600 hours of professional (lawyer) time to the Rucker Co. breech of contract suit to prepare for the trial, at a rate of $200 per hour.
8. Reimbursed travel costs to employees for depositions related to the Rucker case, $21,000.
12. Charged 300 hours of professional time for the Rucker trial at a rate of $260 per hour. 16. Received invoice from consultants Wenzel and Lachgar for $64,000 for expert testimony related to the Rucker trial.
24. Applied office overhead at a rate of $55 per professional hour charged to the Rucker case.
30. Paid secretarial and administrative salaries of $35,000 for the month.
30. Used office supplies for the month, $12,000.
June 30. Paid professional salaries of $180,000 for the month.
30. Billed Rucker $380,000 for successful defense of the case.
a. Provide the journal entries for each of the above transactions.
b. How much office overhead is over or underapplied?
c. Determine the gross profit on the Rucker case, assuming that over or underapplied office overhead is closed monthly to cost of services.
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