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103. Green Corp. uses a predetermined overhead rate based on direct labor hours. Green has determined...

103. Green Corp. uses a predetermined overhead rate based on direct labor hours. Green has determined that overhead was overapplied by $20,000 for the year. The WIP ending inventory was $125,000. The finished goods inventory was $200,000 and the COGS was $500,000. Required: A. Make the journal entries to close the overapplied overhead out to COGS. B. Make the journal entries to prorate the overapplied overhead.

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Expert Solution

Requirement A

General Journal

Debit

Credit

Manufacturing overheads

$ 20,000.00

           Cost of goods sold

$ 20,000.00

(Overheads overapplied adjusted)

Requirement B

General Journal

Debit

Credit

Manufacturing overheads

$ 20,000.00

Ending WIP

$    3,030.30

Ending finished goods inventory

$    4,848.48

Cost of goods sold

$ 12,121.21

(Overheads overapplied adjusted)

Adjustment of Overapplied overheads using prorate method

Unadjusted balances

Apportionment of Overapplied overheads

Adjusted balance

Ending WIP

$ 1,25,000.00

$    (3,030.30)*

$ 1,21,969.70

Ending finished goods inventory

$ 2,00,000.00

$    (4,848.48)

$ 1,95,151.52

Cost of goods sold

$ 5,00,000.00

$ (12,121.21)

$ 4,87,878.79

*20000/(125000+200000+500000) x 125000

Leave a comment in case of any consfusion

ekkarill92 answered 11 months ago
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