Computing under- and overapplied overhead Hoboken Machinery Inc. had a remaining credi...

Computing under- and overapplied overhead

Hoboken Machinery Inc. had a remaining credit balance of $20,000 in its under- and overapplied factory overhead account at year-end. The balance was deemed to be large and, therefore, should be closed to Work in Process, Finished Goods, and Cost of Goods Sold. The year-end balances of these accounts, before adjustment, showed the following:

a. Determine the prorated amount of the overapplied factory overhead that is chargeable to each of the accounts.

b. Prepare the journal entry to close the credit balance in Under- and Overapplied Factory Overhead.