Exercise 1: Visual Company produces gadgets for the coveted small appliance market. The following data reflect activity for the year 2017: Costs incurred: Purchases of direct materials (net) on credit $121,000 Direct manufacturing labor cost 87,000 Indirect labor 54,400 Depreciation, factory equipment 53,000 Depreciation, office equipment 7,700 Maintenance, factory equipment 46,000 Miscellaneous factory overhead 9,100 Rent, factory building 99,000 Advertising expense 97,000 Sales commissions 39,000 Inventories: Direct materials Work in process Finished goods January 1, 2017 $ 9,400 6,500 60,000 December 31, 2017 $18,000 26,000 31,000 Visual Co. uses a normal costing system and allocates overhead to work in process at a rate of $3.10 per direct manufacturing labor dollar. Indirect materials are insignificant so there is no inventory account for indirect materials, Required: Prepare journal entries to record the transactions for 2017 including an entry to close out over or underallocated overhead to cost of goods sold