Do It! Review 15-01 During the current month, Wacholz Company incurs the following manufacturing costs. (a) Purchased raw materials of $17,500 on account. (b) Incurred factory labor of $41,500. Of that amount, $32,400 relates to wages payable and $9,100 relates to payroll taxes payable. (c) Factory utilities of $3,400 are payable, prepaid factory property taxes of $2,640 have expired, and depreciation on the factory building is $8,400. Prepare journal entries for each type of manufacturing cost.

Item (a)

Debit : Raw Materials Item $17,500

Credit : Accounts Payable  $17,500

Item (b)

Debit : Work in Process - Factory Wages $41,500

Credit : Wages Payable $41,500

Item (c)

Debit : Factory Utilities $3,400

Credit : Accounts Payable $3,400

Item (d)

Debit : Work in Process - Property taxes $2,640

Credit : Prepaid Property taxes $2,640

Item (e)

Debit : Work in Process - Depreciation expense $8,400

Credit : Accumulated depreciation $8,400

Explanation:

When no immediate payment of cash is made for a cost incurred, we raise a Liability - Accounts Payable.

cognitive overload: having a lot on your mind impairs decision-making and tends to result in the simplest, but not necessarily best, option being selected.

empathy gaps: overlooking how you might feel in a different situation can result in unnecessary purchases, such as overbuying when shopping for food on an empty stomach.

optimism and overconfidence: wearing rose-tinted glasses and having unrealistic expectations about the future can affect money management and leave you unprepared for a change in circumstance.

instant gratification: seeking instant gratification drives impulsive spending and can undermine long-term planning and savings.

harmful habits: automatic or mindless behaviour can amplify a poor financial decision as it becomes a recurring event.

social norms: we are heavily influenced by the actions of others; while this can be in certain circumstances, it also contributes to the pressure to keep up with the joneses through conspicuous consumption.