Phillips Products, Inc. had a remaining credit balance of $10,000 in its under-and overapplied factory overhead account at year-end. It also had year-end balances in the following accounts:
Work in Process...................................................... $ 25,000
Finished Goods...................................................... 15,000
Cost of Goods Sold .............................................. 85,000
Total....................................................................... $125,000
Required:
1. Prepare the closing entry for the $10,000 of overapplied overhead, assuming that the balance is not considered to be material.
2. Prepare the closing entry for the $10,000 of overapplied overhead, assuming that the balance is considered to be material.