Manufacturing Overhead Work in Process (a) 460,000 (b) 390,000 Bal. 15,000 (c) 710,000 Bal. 70,000 260,000 85,000 (b) 390,000 Bal. 40,000 Finished Goods Cost of Goods Sold Bal. 50,000 | (d) 640,000 (d) 640,000 (c) 710,000 Bal. 120,000
The following information is taken from the accounts of Latta Company. The entries in the T-accounts are summaries of the transactions that affected those accounts during the year.
The
Work in Process, ending . . . . . . . . . . . . . . . . . . . . . . . . . . $ 19,500
Finished Goods, ending . . . . . . . . . . . . . . . . . . . . . . . . . . 58,500
Cost of Goods Sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 312,000
Overhead applied . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 390,000
For example, of the $40,000 ending balance in Work in Process, $19,500 was overhead that had been applied during the year.
Required:
1. Identify reasons for entries (a) through (d).
2. Assume that the underapplied or overapplied overhead is closed to Cost of Goods Sold. Prepare the necessary
3. Assume that the underapplied or overapplied overhead is closed proportionally to Work in Process, Finished Goods, and Cost of Goods Sold. Prepare the necessary journal entry. Provide supporting computations.
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