a. Determine the prorated amount of the overapplied factory overhead that is chargeable to each of the accounts. b. Prepare the journal entry to close the credit balance in Under- and Overapplied Factory Overhead.

FINANCIAL ACCOUNTING
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Chapter1: Financial Statements And Business Decisions
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E4-14
Computing under- and overapplied overhead
ETA Company had a remaining credit balance of $20,000 in its
under- and overapplied 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 adjust-
ment, 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 overapplied factory
overhead that is chargeable to each of the accounts.
b. Prepare the journal entry to close the credit balance in
Under- and Overapplied Factory Overhead.
Transcribed Image Text:E4-14 Computing under- and overapplied overhead ETA Company had a remaining credit balance of $20,000 in its under- and overapplied 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 adjust- ment, 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 overapplied factory overhead that is chargeable to each of the accounts. b. Prepare the journal entry to close the credit balance in Under- and Overapplied Factory Overhead.
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