The Dina Corp. has applied overhead to jobs during the period as follows: The application of overhead has resulted in a $5,600 credit balance in the Factory Overhead account, and this amount is not material. The entry to dispose of this remaining factory overhead balance is:

Question

Quizplus · Accepted Answer

The credit balance of $5,600 in Factory Overhead account indicates that more overhead has been applied to jobs than actual overhead incurred. This amount needs to be disposed of by reducing the Cost of Goods Sold. Therefore, the correct entry would be to debit Factory Overhead and credit Cost of Goods Sold for the same amount of $5,600. Option A is incorrect as it suggests debiting Cost of Goods Sold instead of credit to reduce the balance. Options C and D are incorrect as they suggest moving the balance to Goods in Process Inventory, which is not necessary in this case. Option E is incorrect as the balance needs to be disposed of by making an entry.