Question

Refer to the previous question. Give the journal entry to adjust the Manufacturing Overhead account for overallocated or underallocated overhead.

Short answer

Date	Particulars	Debit ($)	Credit ($)
	Manufacturing overhead	325
	Cost of goods sold		325

Step-by-step solution

Cost of goods sold

The cost of goods sold means the cost incurred by an organization to manufacture the goods which are sold during the year.

Recording of the overallocated overhead

The overallocated overhead is recorded by debiting the manufacturing overhead account and crediting the cost of goods sold account at the end of the period. It is an adjusting entry to eliminate the effect of over allocation.