Manor Painting is a commercial interior and exterior painting contractor specializing in commercial buildings. An inventory of materials and equipment is on hand at all times, so work can start as quickly as possible. Special equipment is ordered as required. On August 1, the Materials Inventory account had a balance of $55,300. The Work-in-Process Inventory account is maintained to record costs of work not yet complete. There were two such jobs on August 1 with the following costs:

Job 84Job 87Materials and equipment$ 24,400$ 80,100Direct labor21,60040,700Overhead (applied)8,64016,280

Overhead has been applied at 40 percent of the costs of direct labor using an annual rate.

During August, Manor Painting started two new jobs. Additional work was carried out on Jobs 84 and 87. Job 87 was completed and billed to the customer. Details on the costs incurred on jobs during August follow:

Job 84Job 87Job 88Job 90Materials and equipment$ 5,800$ 8,500$ 8,200$ 5,700Direct labor (wages payable)9,10011,40010,2003,700

Other August Events

1. Purchased materials and equipment for $15,400.
2. Billed $196,300 to the customer for Job 87 and received payment for $116,300 of that amount.
3. Received $19,900 payment on Job 82 delivered to customer in July.
4. Determined that payroll for indirect labor personnel totaled $2,360.
5. Issued supplies and incidental materials for current jobs costing $880.
6. Recorded overhead and advertising costs for the operation as follows (all cash except equipment depreciation):

Property taxes$ 1,030Storage area rental1,180Truck and delivery cost1,760Advertising and promotion campaign1,330Inspections1,030Telephone and other miscellaneous810Equipment depreciation2,850

Required:

Prepare journal entries to record the flow of costs for operations during August.

Calculate the amount of over- or underapplied overhead for the month. This amount is debited or credited to Cost of Goods Sold.

Determine inventory balances for Materials and Equipment Inventory and Work-in-Process Inventory.