Bartholomew Company incurred $40,000 of depreciation for the year. Seventy percent relates to the firm's production facilities, and 30% relates to sales and administrative offices. If all items are handled in the proper manner, a review of Bartholomew's accounting records should reveal a:
A)debit to Work-in-Process Inventory for $12,000.
B)debit to Manufacturing Overhead for $28,000.
C)debit to Depreciation Expense for $40,000.
D)debit to Manufacturing Overhead for $40,000.
E)credit to Cash for $40,000.

Question

Quizplus · Accepted Answer

Since 70% of the depreciation relates to production facilities, it should be charged to Manufacturing Overhead, which is used to allocate indirect costs to produced goods. Therefore, the correct debit entry is in Manufacturing Overhead for $28,000. The remaining 30% of the depreciation relates to sales and administrative offices, which should be charged to Selling, General and Administrative expenses. However, this is not listed as a choice.

Bartholomew Company Incurred $40,000 of Depreciation for the Year