Question

7 Wow Wo worrappres 20e questOTYS Ursprayeu DevOW. Bergamo Bay's computer system generated the following trial balance on December 31, 2019. The company's manager knows something is wrong with the trial balance because it does not show any balance for Work In Process Inventory but does show a balance for the Factory Overhead account. In addition, the accrued factory payroll (Factory Wages Payable) has not been recorded. Credit Cash Debit $ 70,000 39,000 24,500 12,000 4,000 Accounts receivable Raw materials inventory Work in process inventory Finished goods inventory Prepaid rent Accounts payable Notes payable Common stock Retained earnings Sales Cost of goods sold Factory overhead Operating expenses Totals $ 8,900 11,900 40,000 86,000 193,700 119,000 27,000 45,000 $340, 500 $340, 500 After examining various files, the manager Identifies the following six source documents that need to be processed to bring the accounting records up to date. Materials requisition 21-3010: Materials requisition 21-3011: Materials requisition 21-3012: Labor time ticket 6052: Labor time ticket 6052: Labor time ticket 6054: $ 5,000 direct materials to Job 402 $ 7,200 direct materials to Job 404 $ 1,900 indirect materials $ 4,000 direct labor to Job 402 $ 16,000 direct labor to Job 404 $ 5,000 indirect labor Jobs 402 and 404 are the only units in process at year-end. The predetermined overhead rate is 150% of direct labor cost.

Answer 1

Answer -

2A. Answer -

Revised Factory Overhead Account
Ending balance from trial balance	$27000	$30000	Overhead applied
Indirect materials	$1900
Indirect labor	$5000
Underapplied overhead	3900

Calculation:

As per given information,

Ending balance from trial balance (factory overhead) = $27000

Indirect materials = $1900

Indirect labor = $5000

Now,

Overhead applied:

Predetermined overhead rate is 150% of direct labor cost

So,

Direct labor:

= Direct labor to Job 402 + Direct labor to Job 404

= $16000 + $4000

= $20000

Therefore,

Overhead applied:

= Total direct labor * 150%

= $20000 * 150%

= $30000

And

Underapplied overhead:

= Ending balance from trial balance + Indirect materials + Indirect labor - Overhead applied

= $27000 + $1900 + $5000 - $30000

= $3900

2B. Answer -

Allocate underapplied overhead to cost of goods sold:

Date	General Journal	Debit	Credit
Dec. 31	Cost of goods sold	$3900
	Factory overhead		$3900