2. Assume that the underapplied or overapplied overhead is closed to Cost of Goods Sold. Prepare the necessary journal entry. 3. Assume that the underapplied or overapplied overhead is closed proportionally to Work in Process, Finished Goods, and Cost of Goods Sold. Prepare the necessary journal entry.
The following information is taken from the accounts of Latta Company. The entries in the T-accounts are summaries of the transactions that affected those accounts during the year.
| Manufacturing |
|||
|---|---|---|---|
| Debit | Credit | ||
| (a) | 460,000 | (b) | 390,000 |
| Balance | 70,000 |
| Work in Process | |||
|---|---|---|---|
| Debit | Credit | ||
| Balance | 15,000 | (c) | 710,000 |
| 260,000 | |||
| 85,000 | |||
| (b) | 390,000 | ||
| Balance | 40,000 |
| Finished Goods | |||
|---|---|---|---|
| Debit | Credit | ||
| Balance | 50,000 | (d) | 640,000 |
| (c) | 710,000 | ||
| Balance | 120,000 |
| Cost of Goods Sold | |||
|---|---|---|---|
| Debit | Credit | ||
| (d) | 640,000 |
The overhead that had been applied to production during the year is distributed among Work in Process, Finished Goods, and Cost of Goods Sold as of the end of the year as follows:
| Work in Process, ending | $ 19,500 |
|---|---|
| Finished Goods, ending | 58,500 |
| Cost of Goods Sold | 312,000 |
| Overhead applied | $ 390,000 |
For example, of the $40,000 ending balance in work in process, $19,500 was overhead that had been applied during the year.
Required:.
2. Assume that the underapplied or overapplied overhead is closed to Cost of Goods Sold. Prepare the necessary
3. Assume that the underapplied or overapplied overhead is closed proportionally to Work in Process, Finished Goods, and Cost of Goods Sold. Prepare the necessary journal entry.
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