Refer to the information presented in E2-7 for Cayman Company.

Required:

1. Prepare the journal entries to record actual and applied manufacturing overhead.

2. Prepare the journal entry to transfer the overhead balance to Cost of Goods Sold.

Data from E2-7

Cayman Custom Manufacturing Company applies manufacturing overhead on the basis of machine hours. At the beginning of the year, the company estimated its total overhead cost to be \($300,000\) and machine hours to be 15,000. Actual manufacturing overhead and machine hours were \($340,000\) and 16,000, respectively.