Castagnola 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 overapplied by $1,000.
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 Cost of Goods Sold of $760
B) debit to Cost of Goods Sold of $128,180
C) credit to Cost of Goods Sold of $128,180
D) debit to Cost of Goods Sold of $760

Question

Castagnola 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 overapplied by $1,000.
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 Cost of Goods Sold of $760 
B) debit to Cost of Goods Sold of $128,180 
C) credit to Cost of Goods Sold of $128,180 
D) debit to Cost of Goods Sold of $760

Quizplus · Accepted Answer

Allocating overapplied manufacturing overhead decreases the balances in the inventory and cost of goods sold accounts, resulting in credits to those accounts.
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