The following information is taken from the accounts of Latta Company. The entries in the T-accounts are summaries of the transactions that affected those accounts during the year.

The overhead that had been applied to production during the year is distributed among the ending balances in the accounts as follows:

For example, of the $40,000 ending balance in Work in Process, $19,500 was overhead that had been applied during the year.

Required:

1. Identify reasons for entries (a) through (d).

2. Assume that the company closes any balance in the Manufacturing Overhead account directly to Cost of Goods Sold. Prepare the necessary journal entry.

3. Assume instead that the company allocates any balance in the Manufacturing Overhead account to the other accounts in proportion to the overhead applied in their ending balances. Prepare the necessary journal entry, with supportingcomputations.