Question

Order Costing 6 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. Lanufacturing Overhead 470, 0166) 391.680 78,336 Bal. 726,000 bal. Vork in Process 17,320 274,000 87.000 391.680 44,000 Finished Goods 46,000 (d) 726.000 648,000 Cost of Goods Sold 648,000 The overhead that had been applied to production during the year is distributed among Work in Process, Finished Goods, and Cost of Goods Sold as of the end of the year as follows: York in Process, ending Finished Goods, ending Cost of Goods Sold Overhead applied 21. 120 59,520 311, 040 391, 680 For example, of the $44,000 ending balance in work in process, $21.120 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. Complete this question by entering your answers in the tabs below. < Prex 3 of 7 Next >

Answer 1

1.

Entry	Reason
(a)	Actual manufacturing overhead costs incurred.
(b)	Manufacturing overhead cost applied to work in process.
(c)	Cost of goods manufactured.
(d)	Cost of goods sold.

2.

Event	General Journal	Debit	Credit
1	Cost of goods sold	78336
	Manufacturing overhead		78336
	(To record the adjustment of manufacturing overhead to COGS)

3.

Event	General Journal	Debit	Credit
1	Work in process ($21120/$391680 x $78336)	4224
	Finished goods ($59520/$391680 x $78336)	11904
	Cost of goods sold ($311040/$391680 x $78336)	62208
	Manufacturing overhead		78336
	(To record the adjustment of manufacturing overhead)