Question

Marshall Enterprises charged the following amounts of overhead to jobs during the year: $20,000 to jobs still in process, $60,000 to jobs completed but not sold, and $120,000 to jobs finished and sold. At year-end, Marshall Enterprise's Factory Overhead account has a credit balance of $5,000, which is not a material amount. What entry should Marshall make at year-end?

Answer 1

Answer:

Dr  Factory Overhead Payable $5,000

Cr                          Cost of Goods Sold $5,000

Explanation:

What we have done?

Cr  Factory Overhead   $5000

What we must do?

Dr Factory Overhead $5000

The entry in the expense account is credited, as said in the question. So what we must do is debit it back and waive off its affect from the cost of sales.

So at the end of the period the company is legally required to close the expenses and revenue accounts in-accordance to International Financial Reporting Standards.

What must be the entry?

So the journal entry would be :

Dr  Factory Overhead  $5,000

Cr          Cost of Goods Sold $5,000