Answer (D) is correct.
Under a normal costing system, overhead is applied to all jobs worked on
during the period at a predetermined rate. Because cost of goods sold,
finished goods inventory, and work-in-process inventory all relate to
these jobs, each should be adjusted by its proportionate share of over- or
underapplied overhead. This apportionment may be based on either the
percentage of total overhead (theoretically preferable) or the percentage
of total cost. The entry to close overapplied overhead requires credits to these three accounts.