Cavallo Mfg.'s computer system generated the following trial balance on December 31, 2017. The company's manager knows that the trial balance is wrong because it does not show any balance for Work in Process Inventory but does show a balance for the Factory Overhead account. In addition, the accrued factory payroll (Factory Wages Payable) has not been recorded.

After examining various files, the manager identifies the following six source documents that need to be processed to bring the accounting records up to date.
Materials requisition 94-231: ................$4,600 direct materials to Job 603
Materials requisition 94-232: ................$7,600 direct materials to Job 604
Materials requisition 94-233: ............................$2,100 indirect materials
Labor time ticket 765: .............................$5,000 direct labor to Job 603
Labor time ticket 766: ............................$8,000 direct labor to Job 604
Labor time ticket 777: .......................................$3,000 indirect labor
Jobs 603 and 604 are the only units in process at year-end. The predetermined overhead rate is 200% of direct labor cost.
Required
1. Use information on the six source documents to prepare journal entries to assign the following costs.
a. Direct materials costs to Work in Process Inventory.
b. Direct labor costs to Work in Process Inventory.
c. Overhead costs to Work in Process Inventory.
d. Indirect materials costs to the Factory Overhead account.
e. Indirect labor costs to the Factory Overhead account.
2. Determine the revised balance of the Factory Overhead account after making the entries in part 1. Determine whether there is under- or overapplied overhead for the year. Prepare the adjusting entry to allocate any over- or underapplied overhead to Cost of Goods Sold, assuming the amount is not material.
3. Prepare a revised trial balance.
4. Prepare an income statement for 2017 and a balance sheet as of December 31, 2017.
Analysis Component
5. Assume that the $2,100 indirect materials on materials requisition 94-233 should have been direct materials charged to Job 604. Without providing specific calculations, describe the impact of this error on the income statement for 2017 and the balance sheet at December 31, 2017.

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Debit Credit Ceesh S 64,000 Accounts receivable ....000 Finished goods inventory Prepaid rent 9,000 3,000 Notes payable Common stock Retained earnings Sales S10,500 13,500 30,000 87,000 180,000 Factory overhead ....2000 ....A000 Totals