The Cherokee Company Uses a Predetermined Overhead Rate $\begin{array} { l }\text { Cost of Goods Sold } & \$ 12,000\\\text { Manufacturing Overhead }&\$12,000\end{array}$

question 136

Short Answer

The Cherokee Company uses a predetermined overhead rate. The following accounts have these unadjusted balances: Raw Materials $20,000
Work in Process $40,000
Finished Goods $10,000
Cost of Goods Sold $50,000
If overhead is underapplied by $12,000 and considered immaterial, the journal entry would be a. $\begin{array} { l }\text { Cost of Goods Sold } & \$ 12,000\\\text { Manufacturing Overhead }&\$12,000\end{array}$

b. $\begin{array} { l }\text { Cost of Goods Sold } & \$ 12,000\\\text { Manufacturing Overhead }&\$12,000\end{array}$

c. $\begin{array}{ll}\text { Raw Materials } & \$ 2,000 \\\text { Work in Frocess } & \$ 4,000 \\\text { Finished Goods } & \$ 1,000 \\\text { Cost of Goods Sold } & \$ 5,000\\\text { Manufacturing Overhead }&\$12,000\end{array}$

d. $\begin{array}{ll}\text { Manufacturing Overhead }&\$12,000\\\text { Raw Materials } & \$ 2,000 \\\text { Work in Frocess } & \$ 4,000 \\\text { Finished Goods } & \$ 1,000 \\\text { Cost of Goods Sold } & \$ 5,000\end{array}$

e. $\begin{array}{ll}\text { Manufacturing Overhead }&\$12,000\\\text { Work in Process } & \$ 4,800 \\\text { Finished Goods } & \$ 1,200 \\\text { Cost of Goods Sold } & \$ 6,000\end{array}$

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Definitions:

Aging of Accounts Receivable

An accounting process that categorizes accounts receivable according to the length of time an invoice has been outstanding to manage and collect debts effectively.

Allowance for Uncollectible Accounts

A reserve set aside in the accounting books for debts that are expected not to be collected, reflecting realistic income figures.

Troubled Debt

Debt that the borrower is unable to pay back according to the original agreement, leading to restructuring or modification of terms.

Debt Restructuring

The process of renegotiating the terms of existing loans to provide a distressed borrower with relief, which may include reducing the interest rate, extending payment terms, or reducing the total amount owed.