At the end of the period Carson Company had the following ba

At the end of the period, Carson Company had the following balances in selected accounts: Materials Finished goods Work in process Cost of goods sold Factory overhead $80,000 190,000 0,000 1,000,000 30,000 Required: (a) The factory overhead balance is relatively small; prepare the journal entry to cose the Factory Overhead account Factory Overhead What does a debit balance mean? This means factory overhead was overapplied ead balance is relatively small; prepare the journal entry to dlose the Factory Overhead account as (b) The factory overhead Factory Overhead Cost of Goods Sold relatively What does a credit balance mean?

Solution

Answer:

(1)

factory overhead balance is relatively small, prepare the journal entry to close the Factory Overhead account if the balance in the account is a debit balance.

Account tiltle and Description

Debit $

Credit $

Cost of Goods Sold           

30,000

            Factory Overhead                    

30,000

What does a debit balance mean?

It means under applied overhead in the factory overhead account

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(2)

factory overhead balance is relatively small, prepare the journal entry to close the Factory Overhead account if the balance in the account is a Credit balance.

Account tiltle and Description

Debit $

Credit $

            Factory Overhead                    

30,000

Cost of Goods Sold           

30,000

What does a Credit balance mean?

It means over-applied overhead in the factory overhead account.

Account tiltle and Description	Debit $	Credit $
Cost of Goods Sold	30,000
Factory Overhead		30,000