Bergo Bay's accounting system generated the following account balances on December 31. The company’s manager knows something is wrong with this list of balances because it does not show any balance for Work in Process Inventory, and the accrued factory payroll (Factory Wages Payable) has not been recorded. Debit Credit Cash $ 70,000 Accounts receivable 39,000 Raw materials inventory 24,500 Work in process inventory 0 Finished goods inventory 15,000 Prepaid rent 5,000 Accounts payable $ 11,800 Notes payable 14,800 Common stock 50,000 Retained earnings (prior year) 94,000 Sales 158,900 Cost of goods sold 112,000 Factory overhead 28,000 General and administrative expenses 36,000 Totals $ 329,500 $ 329,500 These six documents must be processed to bring the accounting records up to date. Materials requisition 10: $ 4,400 direct materials to Job 402 Materials requisition 11: $ 7,800 direct materials to Job 404 Materials requisition 12: $ 2,400 indirect materials Labor time ticket 52: $ 7,000 direct labor to Job 402 Labor time ticket 53: $ 13,000 direct labor to Job 404 Labor time ticket 54: $ 5,000 indirect labor Jobs 402 and 404 are the only jobs in process at year-end. The predetermined overhead rate is 150% of direct labor cost. 2-a. In Factory Overhead T-account, enter amounts from part 1 related to factory overhead. Determine the amount of over- or underapplied overhead. 2-b. Prepare the entry to close any over- or underapplied overhead to Cost of Goods Sold.

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter4: Job-order Costing And Overhead Application

Section: Chapter Questions

Problem 4MCQ: The predetermined overhead rate equals a. actual overhead divided by actual activity level for a...

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Bergo Bay's accounting system generated the following account balances on December 31. The company’s manager knows something is wrong with this list of balances because it does not show any balance for Work in Process Inventory, and the accrued factory payroll (Factory Wages Payable) has not been recorded.

	Debit	Credit
Cash	$ 70,000
Accounts receivable	39,000
Raw materials inventory	24,500
Work in process inventory	0
Finished goods inventory	15,000
Prepaid rent	5,000
Accounts payable		$ 11,800
Notes payable		14,800
Common stock		50,000
Retained earnings (prior year)		94,000
Sales		158,900
Cost of goods sold	112,000
Factory overhead	28,000
General and administrative expenses	36,000
Totals	$ 329,500	$ 329,500

These six documents must be processed to bring the accounting records up to date.

Materials requisition 10:	$ 4,400	direct materials to Job 402
Materials requisition 11:	$ 7,800	direct materials to Job 404
Materials requisition 12:	$ 2,400	indirect materials
Labor time ticket 52:	$ 7,000	direct labor to Job 402
Labor time ticket 53:	$ 13,000	direct labor to Job 404
Labor time ticket 54:	$ 5,000	indirect labor

Jobs 402 and 404 are the only jobs in process at year-end. The predetermined overhead rate is 150% of direct labor cost.

2-a. In Factory Overhead T-account, enter amounts from part 1 related to factory overhead. Determine the amount of over- or underapplied overhead.
2-b. Prepare the entry to close any over- or underapplied overhead to Cost of Goods Sold.

In Factory Overhead T-account, enter amounts from part 1 related to factory overhead. Determine the amount of over- or
underapplied overhead.
Actual overhead (given)
Indirect materials
Indirect labor
Underapplied overhead
Factory Overhead
28,000
2,400
5,000
0
Overhead applied

1
Record the entry to allocate any overapplied or underapplied overhead.
Note: Enter debits before credits.
Date
December 31
General Journal
Debit
Credit

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