Refer to the data in Exercise 3-25A. 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 $480,000 as originally reported. The unadjusted cost of goods sold balance at year-end was $600,000.

In Exercise 3-25A

Manufacturing overhead costs ........................................................... $ 600,000

Direct labour cost............................................................................... 1,500,000

Machine hours................................................................................... 75,000

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 over-allocated 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?