Prepare the journal entry to close the credit balance


Question:

ETA Company had a remaining credit balance of $20,000 in its under- and over-applied factory overhead account at year-end. The balance was deemed to be large and, therefore, should be closed to Work in Process, Finished Goods, and Cost of Goods Sold. The year-end balances of these accounts, before adjustment, showed the following:

Work in Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 75,000
Finished Goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,000
Cost of Goods Sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100,000
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $200,000

a. Determine the prorated amount of the over-applied factory overhead that is chargeable to each of the accounts.

b. Prepare the journal entry to close the credit balance in Under- and Over-applied Factory Overhead.

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Accounting Basics: Prepare the journal entry to close the credit balance
Reference No:- TGS02027467

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