The following information is taken from the accounts of Latta Company. The entri

Question

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 Finished Goods 490,752 (b) 408,960 Bal 9,040 (762,000 Bal. 37,000 (666,000 305,500 91,500 408,960 53,000 Bal 81,792 762,000 Bal 133,000 Bal Cost of Goods Sol 666,000 The overhead that had been applied to production during the year is distributed among Work in Process, Finished Goods, and Cost of Goods Sold as of the end of the year as follows: Work in Process, ending Finished Goods, ending Cost of Goods Sold $ 25,440 63,840 319,680 $408,960 Overhead applied For example, of the $53,000 ending balance in work in process, $25,440 was overhead that had been applied during the year

Explanation / Answer

Manufacturing Overheads under-applied: Manufacturing Overheads incurred 490752 Less: Manufacturing Overheads applied 408960 Manufacturing Overheads under-applied: 81792 Under-applied Manufacturing Overheads: Inventory Balance % proportion to Total Under-applied OH Allocated Under-applied OH WIP 53000 6.22% 81792 5088 FG 133000 15.61% 81792 12768 COGS 666000 78.17% 81792 63936 TOTAL 852000 100.00% 81792 81792 Journal entry for Under-applied OH: Event Accounts title and explanations Debit $ Credit $ 1 Work in process inventory Dr. 5088 Finished Goods inventory Dr. 12768 Cost of goods sold Dr. 63936      Manufacturing Overheads 81792

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