LB Enterprises uses a job-order costing system to determine its ending inventory and cost of goods sold. LB's accountant estimated the manufacturing overhead for 1999 to be $595,200. The product the company makes is labor intensive and the estimated labor hours for 1999 were 96,000. Some information pertaining to cost follows: 1. February 28 inventories Materials $ 20,000 Work-in-process 10,000 Finished goods 25,000 2. LB applies manufacturing overhead on the basis of direct labor hours. 3. Actual manufacturing overhead incurred in March was $60,000 (indirect material, $15,000; indirect labor, $20,000; other overhead, $25,000). 4. The average wage rate for direct labor was $8 per hour and the actual number of direct labor hours worked was 10,000 hours. 5. Direct material amounted to 60% of prime costs. 6. March ending inventories in materials and finished goods was $30,000 and $10,000, respectively. 7. The unadjusted cost of goods sold was $250,000. These goods were sold for $400,000. 8. The selling and administrative expenses were $ 120,000 for the month. 130,000 in materials was purchased in March.
Assume the company allocates any over or underapplied overhead to the appropriate accounts based on their ending balances (before proration). Prepare the journal entry to show this allocation, along with the income statement.