Computing under- and overapplied factory overhead Nelson Fabrication Inc. had a remaining credit balance of $20,000 in its under- and overapplied 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 adjustment, showed the following : Work in Process $ 25,000 Finished Goods .... 25,000 Cost of Goods Sold .... 100,000 Total ...... $ 150,000 Determine the prorated amount of the overapplied factory overhead that is chargeable to each of the accounts . b. Prepare the journal entry to close the credit balance in Under- and Overapplied Factory Overhead.

7 Computing under- and overapplied factory overhead Nelson Fabrication Inc. had a remaining credit balance of $20,000 in its under- and overapplied factory overhead account at yearend. 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 adjustment, showed the following: a. Determine the prorated amount of the overapplied factory overhead that is chargeable to each of the accounts. b. Prepare the journal entry to close the credit balance in Underand Overapplied Factory Overhead. 18 Computing under- and overapplied factory overhead Housley Paints Co. had a remaining debit balance of $25,000 in its