Your question:

Minstrel Manufacturing uses a job order costing system. During the month, Minstrel purchased $198,000 of raw materials on credit; issued materials to production of $195,000 of which $30,000 were indirect. Minstrel incurred a factory payroll of $150,000, of which $40,000 was indirect labor. Minstrel uses a predetermined overhead rate of 150% of direct labor cost. The journal entry to record indirect labor cost is:

e. Debit Work in Process Inventory $40,000; credit Cash $40,000.

Assignment Help Answers with Step-by-Step Explanation:

The journal entry to record indirect labor cost in a job order costing system typically involves debiting Factory Overhead and crediting Factory Wages Payable. In this case, the indirect labor cost is $40,000.

Credit Factory Wages Payable ($40,000): This entry reduces the Factory Wages Payable account, which represents the wages owed to the employees for their work in the factory. By crediting this account, you are acknowledging that a portion of the wages payable pertains to indirect labor and will be allocated to overhead.

Option "a" and option "e" are incorrect because they do not appropriately record the indirect labor cost in the Factory Overhead account, which is necessary for proper allocation to jobs in a job order costing system.