Question

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

Factory overheads $5,000 - Debit

Cost of goods sold $5,000 - Credit

Step-by-step explanation:

Credit balance of overheads means over-applied overheads. Hence, when it is not material amount, it will be closed in Cost of goods sold account.

Date Accounts title and explanation Debit Credit

Factory Overheads $5,000

Cost of goods sold $5,000

(For closing the overheads credit balance)