1. A company completed a job on March 31, 20X1. Its cost of goods sold was $1,50
ID: 2342250 • Letter: 1
Question
1. A company completed a job on March 31, 20X1. Its cost of goods sold was $1,500. It sold the job on account to a customer at cost plus 20%. Which of the following is the journal entry to recognize the cost of the job?
Debit Overhead Control by $1,500 and Credit Cost of Goods Sold by $1,500
Debit Cost of Goods Sold by $1,500 and Credit Finished Goods by $1,500
Debit Cost of Goods Sold by $1,800 and Credit Sales Revenue by $1,800
Debit Accounts Receivable by $1,800 and Credit Cost of Goods Sold by $1,800
2. The Overhead Control of a company has an underapplied variance of $200. Which of the following is the journal entry to record the closing of the underapplied overhead?
Debit Overhead Control by $200 and Credit Cost of Goods Sold by $200
Debit Cost of Goods Sold by $200 and Credit Overhead Control by $200
Debit Budget Control by $200 and Credit Overhead Control by $200
Debit Overhead Control by $200 and Credit Budget Control by $200
Explanation / Answer
1- Journal entry to recognize the cost of the job:
Debit Cost of Goods Sold by $1,500 and Credit Finished Goods by $1,500
(Assuming there is no purchases during the period and no opening stock of finished goods. When finished goods are sold, the cost of finished goods are transferred from finished goods to cost of goods sold. Since the sale has been made, the cost of goods sold is charged with the manufacturing cost of the related job)
2- Journal entry to record the closing of the underapplied overhead:
Debit Cost of Goods Sold by $200 and Credit Overhead Control by $200
(underapplied overhead means actual overhead is more than applied overhead hence it should be allocated to cost of goods sold)
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