Average Method $($LO $8-3,4)$

The records of Tillman Corporation's initial and unaudited accounts show the following ending inventory balances, which must be adjusted to actual costs:

As the auditor, you have learned the following information. Ending work$-$in$-$process inventory is $35$ percent complete with respect to conversion costs. Materials are added at the beginning of the manufacturing process, and overhead is applied at the rate of $90$ percent of the direct labor costs. There was no finished goods inventory at the start of the period. The following additional information is also available: $\backslash$begin$\{$tabular$\}\{|$c$|$c$|$c$|$c$|$c$|$c$|\}$

$\backslash$hline $\backslash$multicolumn$\{6\}\{|$c$|\}\{$TILLMAN CORPORATION$\}\backslash \backslash$

$\backslash$hline $\backslash$multicolumn$\{6\}\{|$c$|\}\{$Production Cost Report$-$Weighted$-$Average$\}\backslash \backslash$

$\backslash$hline & Physical Units & Total Costs & Materials & Labor & Overhead $\backslash \backslash$

$\backslash$hline $\backslash$multicolumn$\{6\}\{|$l$|\}\{$Flow of Production Units$\}\backslash \backslash$

$\backslash$hline $\backslash$multicolumn$\{6\}\{|$l$|\}\{$Units to be accounted for:$\}\backslash \backslash$

$\backslash$hline Beginning WIP inventory & $32,000$ & & & & $\backslash \backslash$

$\backslash$hline Units started this period & $118,000$ & & & & $\backslash \backslash$

$\backslash$hline Total units to be accounted for & $150,000$ & & & & $\backslash \backslash$

$\backslash$hline $\backslash$multicolumn$\{6\}\{|$l$|\}\{$Units accounted for:$\}\backslash \backslash$

$\backslash$hline $\backslash$multicolumn$\{6\}\{|$l$|\}\{$Units completed and transferred out:$\}\backslash \backslash$

$\backslash$hline From beginning inventory & $32,000$ & & & & $\backslash \backslash$

$\backslash$hline Started and completed currently & $69,000($ & & & & $\backslash \backslash$

$\backslash$hline Total transferred out & $101,000$ & & $101,000$ & $101,000$ & $101,000\backslash \backslash$

$\backslash$hline Units in ending WIP inventory & $49,000$ & & $49,000$ & $17,150\backslash (>\backslash )$ & $17,150\backslash (>\backslash )\backslash \backslash$

$\backslash$hline Total units accounted for & $150,000$ & & $150,000$ & $118,150$ & $118,150\backslash \backslash$

$\backslash$hline $\backslash$multicolumn$\{6\}\{|$l$|\}\{$Costs to be accounted for:$\}\backslash \backslash$

$\backslash$hline Costs in beginning WIP inventory & & $\backslash$$ $135,340$ X & $\backslash$$ $117,040$ & $\backslash$$ $14,640$ & $\backslash$$ $3,660$ X $\backslash \backslash$

$\backslash$hline Current period costs & & $731,560$ X & $477,060$ & $203,600$ & $50,900\backslash (\backslash$times $\backslash )\backslash \backslash$

$\backslash$hline Total costs to be accounted for & & $\backslash$$ $866,900$ & $\backslash$$ $594,100$ & $\backslash$$ $218,240$ & $\backslash$$ $54,560\backslash \backslash$

$\backslash$hline $\backslash$multicolumn$\{6\}\{|$l$|\}\{$Cost per equivalent unit:$\}\backslash \backslash$

$\backslash$hline Materials & & & $\backslash$$ $\backslash (3\mathrm{.}96\backslash$times $\backslash )$ & & $\backslash \backslash$

$\backslash$hline Labor & & & & $\backslash$$ $1\mathrm{.}85$ & $\backslash \backslash$

$\backslash$hline Overhead & & & & & $\backslash$$ $\backslash (0\mathrm{.}46\backslash$times $\backslash )\backslash \backslash$

$\backslash$hline

$\backslash$end$\{$tabular$\}\backslash$begin$\{$tabular$\}\{|$c$|$c$|$c$|$c$|$c$|$c$|$c$|$c$|$c$|\}$

$\backslash$hline $\backslash$multicolumn$\{9\}\{|$l$|\}\{$Costs accounted for:$\}\backslash \backslash$

$\backslash$hline $\backslash$multicolumn$\{9\}\{|$l$|\}\{$Costs assigned to units transferred out:$\}\backslash \backslash$

$\backslash$hline Materials & & $400,027\backslash (\backslash$times $\backslash )$ & & $400,027$ X & & & & $\backslash \backslash$

$\backslash$hline Labor & & $186,561\backslash (\backslash$vee $\backslash )$ & & & & $186,561$ & & $\backslash \backslash$

$\backslash$hline Overhead & & $46,640$ X & & & & & & $46,640$ X $\backslash \backslash$

$\backslash$hline Total costs of units transferred out & & $633,228$ & & & & & & $\backslash \backslash$

$\backslash$hline $\backslash$multicolumn$\{9\}\{|$l$|\}\{$Costs assigned to ending WIP inventory:$\}\backslash \backslash$

$\backslash$hline Materials & & $194,073$ X & & $194,073$ & & & & $\backslash \backslash$

$\backslash$hline Labor & & $31,679\backslash (>\backslash )$ & & & & $31,679$ & & $\backslash \backslash$

$\backslash$hline Overhead & & $7,920$ & & & & & & $7,920\backslash \backslash$

$\backslash$hline Total ending WIP inventory & & $233,672$ & & & & & & $\backslash \backslash$

$\backslash$hline Total costs accounted for & $\backslash$$ & $866,900$ & $\backslash$$ & $594,100$ & $\backslash$$ & $218,240$ & $\backslash$$ & $54,560\backslash \backslash$

$\backslash$hline

$\backslash$end$\{$tabular$\}$ Answer is not complete.

Complete this question by entering your answers in the tabs below.

Show the journal entry required to correct the difference between the unaudited records and actual ending balances of Work$-$in$-$Process Inventory and Finished Goods Inventory. Debit or credit Cost of Goods Sold for any difference.

Note: If no entry is required for a transaction$/$event$,$ select $"$No journal entry required" in the first account field. Answer is not complete.

Complete this question by entering your answers in the tabs below.

If the adjustment in requirement $\backslash (($b$)\backslash )$ is not made, will the company's income and inventories be overstated or understated?