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The following information is available for Lock-Tite Company, which produces special-order security products and uses a job order costing system.
| | April 30 | | May 31 | |
| Inventories | | | | | | | |
| Raw materials | $ | 46,000 | | | $ | 58,000 | |
| Work in process | | 10,800 | | | | 22,500 | |
| Finished goods | | 66,000 | | | | 41,600 | |
| Activities and information for May | | | | | | | |
| Raw materials purchases (paid with cash) | | | | | | 216,000 | |
| Factory payroll (paid with cash) | | | | | | 357,000 | |
| Factory overhead | | | | | | | |
| Indirect materials | | | | | | 21,000 | |
| Indirect labor | | | | | | 86,000 | |
| Other overhead costs | | | | | | 126,000 | |
| Sales (received in cash) | | | | | | 1,460,000 | |
| Predetermined overhead rate based on direct labor cost | | | | | | 75 | % |
Determine whether there is over or underapplied overhead.
| |
| | | Factory Overhead | | Indirect materials | | | | | Indirect labor | | | | | Other overhead costs | | | | |
Prepare the journal entry to allocate (close) overapplied or underapplied overhead to Cost of Goods Sold.
Journal entry worksheet
- Record entry to allocate (close) underapplied/overapplied overhead to cost of goods sold.
Note: Enter debits before credits.
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| | | Transaction | General Journal | Debit | Credit | | 1 | Cost of goods sold | | | | | Factory overhead | | | | | | | | | | | | | | | | | | |
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