Answer:
The journal entry is
Dr Cost of sales ---------------$22,000
Cr Factory overhead---------$22,000.
Explanation:
At the end of the year:
Total debits equal $624,000
Total credits equal $646,000.
The difference is $646,000 - $624,000 = $22,000
This $22,000 will be the balance at the beginning of the following year.
So the journal entry to close the balance in the Factory overhead account to cost of goods sold is:
Dr Cost of sales ---------------$22,000
Cr Factory overhead---------$22,000.
This means the overhead is under-applied(actual overhead is greater than the budgeted cost)
