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 4 months ago

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