Ringgold Company experienced an event that affected its financial statements as indicated below: Which of the following accounting events caused the indicated effects on the company's accounting equation?
$$\begin{array} { | c | c | c | c | c | c | c | c | c | c | c | c | }
\hline { \text { Assets } } &&& = & \text { Liab. } & + & \text { Equity } & \text { Rev. } & - & \text { Exp. } & = & \text { Net Inc. } \
\hline \begin{array} { c }
\text { Mfg. } \
\text { OH }
\end{array} & + & \text { WIP }\text { Inv. } & & & & & & & & & \
\hline ( 1,200 ) & + & 1,200 & = & \text { n/a } & + & \text { n/a } & \text { n/a } & - & \text { n/a } & = & \text { n/a } \
\hline
\end{array}$$
A)Actual overhead cost was incurred
B)Underapplied overhead was written off
C)Estimated overhead was charged to production
D)None of these.

Question

Ringgold Company experienced an event that affected its financial statements as indicated below: Which of the following accounting events caused the indicated effects on the company's accounting equation?
$$\begin{array} { | c | c | c | c | c | c | c | c | c | c | c | c | } 
\hline  { \text { Assets } } &&& = & \text { Liab. } & + & \text { Equity } & \text { Rev. } & - & \text { Exp. } & = & \text { Net Inc. } \
\hline \begin{array} { c } 
\text { Mfg. } \
\text { OH }
\end{array} & + & \text { WIP }\text { Inv. } & & & & & & & & & \
\hline ( 1,200 ) & + & 1,200 & = & \text { n/a } & + & \text { n/a } & \text { n/a } & - & \text { n/a } & = & \text { n/a } \
\hline
\end{array}$$
A)Actual overhead cost was incurred
B)Underapplied overhead was written off
C)Estimated overhead was charged to production
D)None of these.

Quizplus · Accepted Answer

The event described is the allocation of estimated manufacturing overhead to work-in-process inventory, which increases WIP inventory and decreases manufacturing overhead, with no effect on liabilities, equity, revenue, expenses, or net income.

Ringgold Company Experienced an Event That Affected Its Financial Statements