Moira Company has just finished its first year of operations and ...

[luminitza]

Moira Company has just finished its first year of operations and must decide which method to use for adjusting cost of goods sold.
 
  Because the company used a budgeted indirect-cost rate for its manufacturing operations, the amount that was allocated (435,000) to cost of goods sold was different from the actual amount incurred (425,000).
 
  Ending balances in the relevant accounts were:
 
   Work-in-Process  40,000
   Finished Goods 80,000
   Cost of Goods Sold 680,000
 
  Required:
  a. Prepare a journal entry to write off the difference between allocated and actual overhead directly to Cost of Goods Sold. Be sure your journal entry closes the related overhead accounts.
 
  b. Prepare a journal entry that prorates the write-off of the difference between allocated and actual overhead using ending account balances. Be sure your journal entry closes the related overhead accounts.

Question 2

Expenses can result from
 a. increasing owner's equity
  b. consuming services
  c. using up liabilities
  d. purchasing assets

[lou]

Answer to Question 1

Answer:
a. Manufacturing Overhead Allocated 435,000
Cost of Goods Sold 10,000
Manufacturing Overhead Control 425,000

b. Work-in-process  40,000 5   10,000 = 500
Finished goods 80,000 10  10,000 = 1,000
Cost of goods sold 680,000 85  10,000 = 8,500
Total 800,000 100

Manufacturing Overhead Allocated 435,000
Work-in-Process 500
Finished Goods 1,000
Cost of Goods Sold 8,500
Manufacturing Overhead Control 425,000

Answer to Question 2

b

[luminitza]

Thanks for the timely response, appreciate it

[LegendaryAnswers]

TYSM