Creation Company produces gadgets for the coveted small appliance market. The following data reflect activity for the year 2014:

Costs incurred:

Purchases of direct materials (net) on credit...... $ 122,000

Direct manufacturing labor cost ...........83,000

Indirect labor ...................54,000

Depreciation, factory equipment ............32,000

Depreciation, office equipment ........... 7,900

Maintenance, factory equipment ...........29,000

Miscellaneous factory overhead ........... 9,900

Rent, factory building ..............78,000

Advertising expense ................94,000

Sales commissions ...............33,000

Inventories:

Creation Co. uses a normal-costing system and allocates overhead to work in process at a rate of $ 2.60 per direct manufacturing labor dollar. Indirect materials are insignificant so there is no inventory account for indirect materials.

Required
1. Prepare journal entries to record the transactions for 2014 including an entry to close out over-or­underallocated overhead to cost of goods sold. For each journal entry indicate the source document that would be used to authorize each entry. Also note which subsidiary ledger, if any, should be referenced as backup for the entry.
2. Post the journal entries to T-accounts for all of the inventories, Cost of Goods Sold, the Manufacturing Overhead Control Account, and the Manufacturing Overhead AllocatedAccount.

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Jamary 1. 2014 Direct materials Work in process Finished goods $9,800 6,300 68,000 December 31,2014 $13,000 23,000 27000