Question

Exercise 3-8 Applying Overhead; Journal Entries; Disposing of Underapplied or Overapplied 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. points Manufacturing Overhead 495,360 (b) 412,800 82,560 (a) Bal. Bal. 778,880 670,000 Work in Process 7,200 (c) 312,500 92,500 412,800 55,000 Finished Goods 35,000 (d) 770,000 135,000 Bal. (c) Bal. eBook (b) Bal. Print Cost of Goods Sold 670,000 (d) 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: References Work in Process, ending Finished Goods, ending Cost of Goods Sold Overhead applied $ 26,400 64,800 321,600 $ 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. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Identify reasons for entries (a) through (d). Reason Entry (a) (b) (c) (d) Required 1 Required 2 >

Answer 1

Answer with working is given below

ཁྱི @ g Reason Actual manufacturing overhead incurred Manufacturing overhead applied to Work in process Account Cost of completed Finished goods transferred from Work in process to Finished goods inventory Cost of Finished goods sold during the period charged to Cost to Goods sold Date Credit Debit $82,560 General Journal Cost of Goods sold To manufacturing overhead (Being under-absorbed overheads charged to Cost of goods sold) $82,560 3 Date Credit General Journal Work in process Finished Goods Cost of Goods sold To manufacturing overhead (Being under-absorbed overheads charged to WIP, FG and Cost of goods sold) Debit $5,280 $12,960 $64,320 $82,560 Working notes: Work in process Finished Goods Cost of Goods sold Balance $26,400 $64,800] $321,600 $412,800 Ratio 0.0640 0.1570 0.7791 Allocation $5,280 $12,960 $64,320 $82,560