Computing Under and Over Applied Overhead

Central Manufacturing had a remaining credit balance of $20,000 in its under- and over-applied factory overhead account at year end. The balance was deemed to be large and, therefore, should be closed to Work In Process, Finished Goods, and Cost of Goods Sold. The year-end balances of these accounts, before adjustments, showed the folowing: Work in Process $29,000

Finished Goods 21,000

Cost of Goods Sold 110,000

Total 160000

"(a) Determine the prorated amount of the over-applied factory overhead that is chargeable to each of the accounts. (b) Prepare the journal entry to close the credit balance in under- and over-applied factory overhead."

a. $ % Work in Process Finished Goods Cost of Goods Sold Total Work in Process Finished Goods Cost of Goods Sold

b. Dr Cr Under-and Overapplied Factory Overhead Work in Process Finished Goods Cost of Goods Sold

a.
	$	%
Work in Process
Finished Goods
Cost of Goods Sold
Total
Work in Process
Finished Goods
Cost of Goods Sold
b.	Dr	Cr
Under-and Overapplied Factory Overhead
Work in Process
Finished Goods
Cost of Goods Sold