Refer to the data in Exercise 5-26A . Freeman’s accountant found an error in the expense records from the year reported. Depreciation on manufacturing plant and equipment was actually $400,000, not the $500,000 originally reported. The unadjusted cost of goods sold balance at year end was $600,000.

Data in Exercise 5-26A . 

Freeman Foundry uses a predetermined manufacturing overhead rate to allocate overhead to individual jobs based on the machine hours required. At the beginning of the year, the company expected to incur the following: 

At the end of the year, the company had actually incurred the following: 

Requirements

1. Prepare the journal entry(s) to record manufacturing overhead costs incurred. 

2. Prepare the journal entry to record the manufacturing overhead allocated to jobs in production. 

3. Use a T-account to determine whether manufacturing overhead is underallocated or overallocated, and by how much. 

4. Record the entry to close out the underallocated or overallocated manufacturing overhead. 

5. What is the adjusted ending balance of cost of goods sold?

Transcribed Image Text:

Manufacturing overhead cost Direct labour cost .... Machine hours ......... $ 650,000 1,500,000 81,250 hours