Jaquish Inc. has provided the following data for the month of January. There were no beginning inventories; consequently, the direct materials, direct labor, and manufacturing overhead applied listed below are all for the current month.
Manufacturing overhead for the month was underapplied by $6,000.
The company allocates any underapplied or overapplied manufacturing overhead among work in process, finished goods, and cost of goods sold at the end of the month on the basis of the overhead applied during the month in those accounts.
-The journal entry to record the allocation of any underapplied or overapplied manufacturing overhead for January would include the following:
A) credit to Work in Process of $480
B) debit to Work in Process of $8,830
C) debit to Work in Process of $480
D) credit to Work in Process of $8,830

Question

Jaquish Inc. has provided the following data for the month of January. There were no beginning inventories; consequently, the direct materials, direct labor, and manufacturing overhead applied listed below are all for the current month.
  Manufacturing overhead for the month was underapplied by $6,000.
The company allocates any underapplied or overapplied manufacturing overhead among work in process, finished goods, and cost of goods sold at the end of the month on the basis of the overhead applied during the month in those accounts.
-The journal entry to record the allocation of any underapplied or overapplied manufacturing overhead for January would include the following:
A) credit to Work in Process of $480 
B) debit to Work in Process of $8,830 
C) debit to Work in Process of $480 
D) credit to Work in Process of $8,830

Quizplus · Accepted Answer

Allocating underapplied manufacturing overhead increases the balances in the inventory and cost of goods sold accounts, resulting in debits to those accounts.
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