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.

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:
. . . . $ 19,500 . . . . . 58,500 . . . . . . . . 312,000 . . . . . . . . . . $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:
1. Identify reasons for entries

(a) through (d).
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.
Provide supporting computations.

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Manufacturing Overhead (a) 460,000 (b) Bal. 70,000 Work in Process 390,000 Bal. 15,000 (c) 710,000 260,000 85,000 (b) 390,000 Bal. 40,000 Finished Goods Cost of Goods Sold Bal. 50,000 (d) 640,000 (d) 640,000 (c) 710,000 Bal. 120,000