At December 31, balances in Manufacturing Overhead are Waterway Company - $1,540 positive, Monty Company --$1,088 negative. Assuming the December 31 adjustment is made to cost of goods sold indicate the effect that each company's adjustment has on its cost of goods sold. Waterway Company: The adjustment will Cost of Goods Sold and Manufacturing Overhead. Manufacturing Overhead Monty Company: Cost of Goods Sold and The adjustment wil increase decrease