Computing under- and overapplied overhead Newark Plastics Inc. had a remaining debit ba...

Computing under- and overapplied overhead

Newark Plastics Inc. had a remaining debit balance of $25,000 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 underapplied factory overhead that is chargeable to each of the accounts.

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