Closing under- and overapplied overhead at year-end LO Western Gear Company had a remaining debit balance of $10,000 in its under- and overapplied factory overhead account at year-end. It also had yearend balances in the following accounts:

Required:
1. Prepare the closing entry for the $10,000 of underapplied overhead, assuming that the balance is not considered to be material.
2. Prepare the closing entry for the $10,000 of underapplied overhead, assuming that the balance is considered to be material.

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Work in Process.... Finished Goods... Cost of Goods Sold Totals... $ 25,000 15,000 85,000 $125,000