The Robinson Corporation manufactures automobile parts. During the year, the company sold $5,600,000 of parts that had a cost of $3,200,000. At year end, these are the balances for cost of goods sold and its manufacturing overhead accounts:
Cost of goods sold $3,200,000
Manufacturing overhead allocated $1,400,000
Manufacturing overhead control $1,495,000
What would be the correct journal entry to close out the overhead accounts assuming that the write-of to cost of goods sold approach is used?

Question

Quizplus · Accepted Answer

To close out the overhead accounts using the write-off to cost of goods sold approach, the following journal entry would be made:
Debit: Manufacturing overhead control $1,495,000
Credit: Cost of goods sold $1,495,000
Credit: Manufacturing overhead allocated $1,400,000
The entry reduces the manufacturing overhead control account to zero, writes off the remaining $95,000 of overallocated overhead to cost of goods sold, and removes the balance in the manufacturing overhead allocated account. Choice D is the correct journal entry that matches the above explanation.

The Robinson Corporation Manufactures Automobile Parts