Daniel Company's manufacturing overhead account showed a $4,500 overallocated balance at the end of 2005. Actual overhead incurred was $95,000. Other accounts showed the following balances:
$$\begin{array} { | l | l | }
\hline \text { Materials inventory } & \$ 10,000 \
\hline \text { Work in process inventory } & \$ 30,000 \
\hline \text { Finished goods inventory } & \$ 45,000 \
\hline \text { Cost of goods sold } & \$ 275,000 \
\hline
\end{array}$$ The entry to close the manufacturing overhead account would include which of the following?

Question

Daniel Company's manufacturing overhead account showed a $4,500 overallocated balance at the end of 2005. Actual overhead incurred was $95,000. Other accounts showed the following balances:
$$\begin{array} { | l | l | } 
\hline \text { Materials inventory } & \$ 10,000 \
\hline \text { Work in process inventory } & \$ 30,000 \
\hline \text { Finished goods inventory } & \$ 45,000 \
\hline \text { Cost of goods sold } & \$ 275,000 \
\hline
\end{array}$$ The entry to close the manufacturing overhead account would include which of the following?

Quizplus · Accepted Answer

The correct entry to close the manufacturing overhead account with an overallocated balance involves debiting the manufacturing overhead for $4,500, which removes the overallocated amount from the account.

Daniel Company's Manufacturing Overhead Account Showed a $4,500 Overallocated Balance