Briton Inc

question 24

Essay

Briton Inc.has two processes-Coloring Department and Mixing Department.Briton sold 350 gallons on account at $110 per gallon.The total cost of processing was $385,000 for 5,500 gallons of paint.Throughout the year,the company used a predetermined overhead allocation rate to allocate $75,000 and $65,000 of indirect costs to the Coloring Department and Mixing Department,respectively.The actual overhead cost incurred amounted to $150,000 at the end of the year.Record the necessary journal entries for the sale of goods and for adjustment of over- or underallocated manufacturing overhead at the end of the year.Briton uses the perpetual inventory system and process costing.

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Definitions:

Prepaid Insurance

Payments made in advance for insurance coverage, which are recorded as an asset and expensed over the period of coverage.

Adjusting Entry

An accounting record made to update the balances of accounts to reflect the true financial position before preparing financial statements.

Unexpired Insurance

The portion of the insurance premium that has not yet expired or been used up, considered a prepaid expense.

Office Supplies

Consumable items that are used in the daily operations of an office like pens, paper, and staplers.