7) Warren Company uses a predetermined overhead rate. Overhead for the next twelve months is estimated to be $480,000. Jackson applies overhead as a percentage of direct labor cost. Direct labor costs are estimated to be $400,000 for the next year. During the year actual direct labor costs amounted to $520,000 and the actual overhead was $605,000. Required: (1) Calculate the over/under-applied overhead for the year. (2) Prepare the journal entries to close the accounts, assuming that the over/under-applied overhead closed to cost of goods sold.