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 OverheadDebitCredit(a)495,360(b)412,800Balance82,560Work in ProcessDebitCreditBalance7,200(c)770,000312,50092,500(b)412,800Balance55,000Finished GoodsDebitCreditBalance35,000(d)670,000(c)770,000Balance135,000Cost of Goods SoldDebitCredit(d)670,000

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$ 26,400Finished Goods, ending64,800Cost of Goods Sold321,600Overhead applied$ 412,800

For example, of the $55,000 ending balance in work in process, $26,400 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.

NoEventGeneral JournalDebitCredit1a.

• Record the allocation of any balance in the manufacturing overhead account to other accounts.

Note: Enter debits before credits.

NoEventGeneral JournalDebitCredit1a.

EventGeneral JournalDebitCredita.