Lally, Inc., produces universal remote controls. Lally uses a JIT costing system. One of the company’s products has a standard direct materials cost of \($7\) per unit and a standard conversion cost of \($26\) per unit.

During January 2011, Lally produced 575 units and sold 570. It purchased \($6,800\) of direct materials and incurred actual conversion costs totaling $14,000.

Requirements 

1. Prepare summary journal entries for January.

2. The January 1, 2011, balance of the Raw and in-process inventory account was \($40\). Use a T-account to find the January 31 balance.

3. Use a T-account to determine whether Conversion costs are over- or-under-allocated for the month. By how much? Give the journal entry to close the Conversion costs account.