Exercise 3-8 (Algo) Applying Overhead; Journal Entries; Disposing of Underapplied or Overapplled Overhead [LO3-1, LO3-2, LO3-4] The following information is taken from the accounts of Latta Company. The entries in the T-accounts are summaries of the transactions that affected those accounts during the year. Manufacturing Overhead Debit (0) Balance 499,968 (b) 83,328 Work in Process Finished Goods Credit Debit Credit Debit Credit 416,640 Balance (b) Balance 5,360 (c) 319,500 93,500 416, 640 57,000 778,000 Balance (c) 33,000 (d) 778,000 674,000 Balance 137,000 Cost of Goods Sold Debit Credit (d) 674,000 The overhead that had been applied to production during the year is distributed among Work in Process, Finished Goods, and Cost of Goods Sold as of the end of the year as follows: Work in Process, ending Finished Goods, ending Cost of Goods Sold Overhead applied $ 27,360 65,760 323,520 $416,640 For example, of the $57,000 ending balance in work in process, $27,360 was overhead that had been applied during the year. Required: 1. Identify reasons for entries (a) through (d). 2. Assume that the underapplied or overapplied overhead is closed to Cost of Goods Sold. Prepare the necessary journal entry. 3. Assume that the underapplied or overapplied overhead is closed proportionally to Work in Process, Finished Goods, and Cost of Goods Sold. Prepare the necessary journal entry. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Assume that the underapplied or overapplied overhead is closed proportionally to Work in Process, Finished Goods, and Cost of Goods Sold. Prepare the necessary journal entry. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations.) View transaction list Complete this question by entering your answers In the tabs below. Required 1 Required 2 Requir3 Identify reasons for entries (a) through (d). Entry (a) (b) (c) (d) Reason Required 1 Required 2 Record the adjustment of manufacturing overhead account to COGS. Hote: Enter debits before credits. Event 1 General Journal Debit Credit Record entry Clear entry View general journal Assume that the underapplied or overapplied overhead is closed proportionally to Work in Process, Finished Goods, and Cost of Goods Sold. Prepare the necessary journal entry. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations.) View transaction list Journal entry worksheet < Record the allocation of any balance in the manufacturing overhead account to other accounts. Note: Enter debits before credits Event 1 General Journal Debit Credit Adams Company is a manufacturer that completed numerous transactions during the month, some of which are shown below: a. Manufacturing overhead costs incurred on account, $80,000. b. Depreciation was recorded for the month, $35,000 (80% related to factory equipment, and the remainder related to selling and administrative equipment). c. Prepaid insurance expired during the month, $2,500 (75% related to production, and 25% related to selling and administration). d. Applied $115,000 of manufacturing overhead to production during the month. e. Closed $5,125 of overapplied overhead to cost of goods sold. Required: The table shown below includes a subset of Adams Company's balance sheet accounts. Record each of the above transactions using the accounts that are given. (If a transaction increases an account balance, then record the amount as a positive number. If it decreases an account balance, then record the amount with minus sign.) Work Transaction in Process Manufacturing Overhead Prepaid Expenses PP&E Accounts Retained (net) Payable Earnings a b. d