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 | |||
(a) | 481,536 | (b) | 401,280 |
Bal. | 80,256 |
Work in Process | |||
Bal. | 12,720 | (c) | 746,000 |
291,500 | |||
89,500 | |||
(b) | 401,280 | ||
Bal. | 49,000 |
Finished Goods | |||
Bal. | 41,000 | (d) | 658,000 |
(c) | 746,000 | ||
Bal. | 129,000 |
Cost of Goods Sold | |||
(d) | 658,000 |
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 | $ | 23,520 |
Finished Goods, ending | 61,920 | |
Cost of Goods Sold | 315,840 | |
Overhead applied | $ | 401,280 |
For example, of the $49,000 ending balance in work in process, $23,520 was overhead that had been applied during the year.
Required:
1. Identify reasons for entries (a) through (d).
Identify reasons for entries (a) through (d).
|
2. Assume that the underapplied or overapplied overhead is closed to Cost of Goods Sold. Prepare the necessary journal entry.
Note: Enter debits before credits.
|
3. Assume that the underapplied or overapplied overhead is closed proportionally to Work in Process, Finished Goods, and Cost of Goods Sold. Prepare the necessary journal entry.
Note: Enter debits before credits.
|
ANSWER1
Reasons:
a. Actual Manufacturing Overhead for the year.
b. Applied Manufacturing Overhead for the year.
c. Cost of goods manufactured for the year.
d. Cost of goods sold for the year.
ANSWER2
DATE | GENERAL JOURNAL | DEBIT (in$) | CREDIT (in$) |
Cost of Goods Sold | 80,526 | ||
Manufacturing Overhead | 80,526 |
ANSWER3
DATE | GENERAL JOURNAL | DEBIT (IN$) | CREDIT (in$) |
Work in Process ($80,526 * $23,520 /$401,280) | 4,720 | ||
Finished Goods($80,526 *$61,920 /$401,280) | 12,426 | ||
Cost of Goods Sold($80,526*315,840 /401,280) | 63,380 | ||
Manufacturing Overhead | $80,526 |
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