At the end of the Current period, a Company learned that that its overhead was under...
At the end of the Current period, a Company learned that that its overhead was under applied by $1,500 and this amount is not considered material. Based on this information, the Company should:
a. Credit Finished Goods inventory by $1,500
b. Credit Cost of Goods sold by $1,500.
c. Debit Cost of Goods Sold by $1,500.
d. Do nothing because the amount is not material
e. Apologize to the affected company and send it a check for $1,500.
Homework Answers
Overhead cost of $1,500 is not recorded. This cost should be added to cost of goods sold.
Cost of goods sold should be debited with $1,500.
Debit Cost of Goods Sold by $1,500
Option c.
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Company A had the following transactions in January. All went to one job. 1. Purchased Raw Materials on account for 46,300 2. 36.000 of Raw materials were issued from the stockroom to manufacturing, Of this total 8,800 was indirect material and 27.200 was direct material 3. Salaries paid to factory workers was 55,000. All was paid in cash, ignore payroll taxes. 4. Labor was charged...
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