Chapter 3, Problem 8E

EXERCISE 3-8 Applying Overhead: Journal Entries; Disposing of Underapplied or Overapplied Overhead LO3-1, LO3-2, LO3-4

Work in Process, ending....................$19.500
Finished Goods, ending....................58,500
Cost of Goods Sold....................312.000
Overhead applied....................$390.0::

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 journal entry.
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.