Nathan Industries had a remaining debit balance of $20,000 in its under-and overapplied factory overhead account at year-end. It also had year-end balances in the following accounts:
Work in Process........................................................... $ 20,000
Finished Goods............................................................ 30,000
Cost of Goods Sold..................................................... 50,000
Total............................................................................ $100,000
Required:
1. Prepare the closing entry for the $20,000 of underapplied overhead, assuming that the balance is not considered to be material.
2. Prepare the closing entry for the $20,000 of underapplied overhead, assuming that the balance is considered to be material.