Assume that the company allocates any underapplied or overapplied overhead to Wo

Question

Assume that the company allocates any underapplied or overapplied overhead to Work in Process. Finished Goods and Cost of Goods Sold on the basis of the amount of overhead applied durning the year that remains in each account at the end of the year These amounts are $52.350 for work in process $174 500 for finished goods and $645 650 for cost of goods sold Prepare the journal entry to show the allocation for the year (If no entry is required for a transaction/event. select "No journal entry required" in the first account field. Round your intermediate calculations to 2 decimal places.) How much higher or lower will net operating income to be for the year if the underapplied or overapplied overhead is allocated rather than closed directly to Cost of Goods Sold?

Explanation / Answer

Journal Entry to adjust the Under applied overhead:

Accounts Title / Explanations

Debit

Credit

Work in process = 52350* Under applied Overhead / (52350+174500+645650) =

XXXX

Finished Goods = 174500* Under applied overhead / (52350+174500+645650) =

XXXX

Cost of goods sold = 645650* Under applied overhead / (52350+174500+645650) =

XXXX

Manufacturing Overhead (Under applied overhead)

XXXX

(Being under applied overhead adjusted)

Journal Entry to adjust the Under applied overhead:

Accounts Title / Explanations

Debit

Credit

Work in process = 52350* Under applied Overhead / (52350+174500+645650) =

XXXX

Finished Goods = 174500* Under applied overhead / (52350+174500+645650) =

XXXX

Cost of goods sold = 645650* Under applied overhead / (52350+174500+645650) =

XXXX

Manufacturing Overhead (Under applied overhead)

XXXX

(Being under applied overhead adjusted)

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