Moira Company Has Just Finished Its First Year of Operations $\quad$

question 82

Essay

Moira Company has just finished its first year of operations and must decide which method to use for adjusting cost of goods sold. The company used a predetermined manufacturing overhead rate for its manufacturing operations. The amount that was allocated ($435,000) to work in process was different from the actual amount incurred ($425,000). Following are the respective ending balances in the accounts that contained manufacturing overhead costs:

Work-in-Process $\quad$$\quad$ $40,000
Finished Goods $\quad$$\quad$$\quad$ 80,000
Cost of Goods Sold $\quad$ 680,000

Required:
a. Prepare a journal entry to write off the difference between allocated and actual overhead directly to Cost of Goods Sold. Be sure your journal entry closes the related overhead accounts.
b. Prepare a journal entry that prorates the write-off of the difference between allocated and actual overhead using ending account balances. Be sure your journal entry closes the related overhead accounts.

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Definitions:

Wireless Networks

Communication networks that utilize radio waves or microwaves to connect devices and enable data transmission without physical connections.

Wireless Payment Service

A payment method that allows customers to make transactions using wireless technology, often through mobile devices without physical card swiping.

NFC

Near Field Communication, a set of communication protocols that enable two electronic devices, one of which is usually a portable device such as a smartphone, to establish communication by bringing them within 4 cm of each other.