EXERCISE 3-8 Applying Overhead; Journal Entries; Disposing of Underapplied or Ov

Question

EXERCISE 3-8 Applying Overhead; Journal Entries; Disposing of Underapplied or Overapplied Overhead LO3-1, LO3-2, LO3-4 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 Manufacturing Overhead Work in Process 460,000 (b) 390,000 Bal 15,000(c) 710,000o 260,00O 85,000 390,000 40,000 Bal 70,000 Bal Finished Goods Cost of Goods Sold 50,000 (d) 710,000O 120,000 Bal 640,000 640,000 Bal The overhead that had been applied to production during the year is distributed among Work inished Goods, and Cost of Goods Sold as of the end of the year as follows

Explanation / Answer

1) (a) Actual manufacturing cost for the year (b) Manufacturing overhead applied to Work in process ( c ) Cost of goods manufactured for the year (d) cost of goods sold for the year 2) Journal Entry General Journal Debit Credit Cost of goods sold 70,000 Manufacturing overhead 70,000 3) Work in process (70000*19500)/390000 3500 Finished goods (70000*58500)/390000 10500 cost of goods sold (70000*312000)/390000 56000 manufacturing overhead 70,000

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