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At the end of the period, Carson Company had the following balances in selected accounts: Materials $ 80,000 Finished goods 190,000 Work in process 70,000

At the end of the period, Carson Company had the following balances in selected accounts:

Materials $ 80,000
Finished goods 190,000
Work in process 70,000
Cost of goods sold 1,000,000
Factory overhead 30,000

Required:

(a) The factory overhead balance is relatively small; prepare the journal entry to close the factory overhead account assuming a debit balance. What does a debit balance mean?
(b) The factory overhead balance is relatively small; prepare the journal entry to close the factory overhead account assuming a credit balance. What does a credit balance mean?
Refer to the Chart of Accounts for exact wording of account titles.

CHART OF ACCOUNTSCarson CompanyGeneral Ledger

ASSETS
110 Cash
121 Accounts Receivable
131 Materials
133 Work in Process
135 Factory Overhead
137 Finished Goods
141 Supplies
142 Prepaid Expenses
181 Land
190 Factory Equipment
191 Accumulated Depreciation
LIABILITIES
210 Accounts Payable
221 Utilities Payable
251 Wages Payable
EQUITY
311 Common Stock
340 Retained Earnings
351 Dividends
390 Income Summary
REVENUE
410 Sales
610 Interest Revenue
EXPENSES
510 Cost of Goods Sold
520 Wages Expense
531 Insurance Expense
532 Utilities Expense
533 Office Supplies Expense
560 Depreciation Expense
590 Miscellaneous Expense
710 Interest Expense

(a) The factory overhead balance is relatively small; prepare the journal entry to close the factory overhead account assuming a debit balance on December 31.
(b) The factory overhead balance is relatively small; prepare the journal entry to close the factory overhead account assuming a credit balance on December 31.
Refer to the Chart of Accounts for exact wording of account titles.

PAGE 1

JOURNAL

DATE DESCRIPTION POST. REF. DEBIT CREDIT

1

2

3

4

What does a debit balance mean? A debit balance indicates that the factory overhead was . What does a credit balance mean? A debit balance indicates that the factory overhead was .

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