Moira Company has just finished its first year of operations and must decide which method to use for ...

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 budgeted indirect-cost rate for its manufacturing operations. The amount that was allocated ($435,000) to cost of goods sold was different from the actual amount incurred ($425,000). These were the respective ending balances in the Manufacturing Overhead Allocated and Manufacturing Overhead control accounts.

Ending balances in the relevant accounts were:

   Work-in-Process   $40,000
   Finished Goods   80,000
   Cost of Goods Sold     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.