E4-17 Computing under- and overapplied factory overheadNelson Fabrication Inc. had a remaining credit balance of $20,000in its under- and overapplied factory overhead account at yearend. The balance was deemed to be large and, therefore, shouldbe closed to Work in Process, Finished Goods, and Cost of GoodsSold. 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

a. Determine the prorated amount of the overapplied factoryoverhead that is chargeable to each of the accounts.

b. Prepare the journal entry to close the credit balance in Underand Overapplied Factory Overhead.