Hoboken Machinery Inc. had a remaining credit balance of $20,000 in its under-and overapplied factory overhead account
Question:
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:
Work in Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 25,000
Finished Goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,000
Cost of Goods Sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100,000
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $150,000
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.
Step by Step Answer:
a Work in Process 25000 1667 Finished Goods 25000 1667 Cost of Goods Sold 100000 6667 Total 150000 ...View the full answer
