V. After finishing the year we decided to adjust the CGS. We used a budgeted indirect-cost rate for the manufacturingoperations, the amount that was allocated ($645,000) to cost of goods sold was different from the actual amount incurred ($625,000).

Ending balances in the relevant accounts were:

Work-in-Process$ 80,000

Finished Goods160,000

Cost of Goods Sold1,360,000

Required:

a.Prepare a journal entry to write off the difference between allocated and actual overhead directly to Cost of Goods Sold. (6 points)

b.Prepare a journal entry that prorates the write-off of the difference between allocated and actual overhead using ending account balances.(show calculations) (14 points)