Problem: Roberts Manufacturing had a remaining debit balance of $20,000 of in its under and over-applied factory overhead account at year-end. It also had year end balances in the following accounts:
Work in Process - $20,000
Finished Goods - 30,000
Cost of Goods Sold - 50,000
Total - $100,000
1. Prepare the closing entry for the $20,000 of under-applied overhead, assuming that the balance is not considered to be material.
2. Prepare the closing entry for the $20,000 of under-applied overhead, assuming that the balance is considered to be material.