The Fine manufacturing company uses job order costing system. The company uses machine hours to apply overhead cost to jobs. At the beginning of 2012 , the company estimated that 150,000 machine hours would be worked and $900,000 overhead cost would be incurred during 2012. The balances of raw materials, work in process (WIP), and finished goods at the beginning of 2012 were as follows: - Raw materials: $40,000 - Work in process: $30,000 - Finished goods: $60,000 The Fine manufacturing company recorded the following transactions during 2012: - a. Raw materials purchased on account, $820,000. - b. Raw materials were requisitioned for use in production, $760,000($720,000 direct materials and $40,000 indirect materials). - c. Direct labor labor, \$150,000; indirect labor, \$220,000; sales commission, \$180,000; and administrative salaries, $400,000. - d. Sales travel costs were $34,000. - e. Utility costs incurred in the factory, $86,000. - f. Advertising expenses were $360,000. - g. Depreciation for the year was $700,000($560,000 relates to factory and $140,000 relates to selling and administrative activities). - h. Insurance expired during the year, $20,000($14,000 relates to factory operations and $6,000 relates to selling and administrative activities). - i. Fine manufacturing company worked 160,000 machine hours. Manufacturing overhead was applied to production. - j. Goods costing $1,800,000 were completed during the year. - k. The goods costing $1,740,000 were sold to customers for $3,000,000. Required: 1. Prepare journal entries, T-accounts and income statement from the above information. 2. Prepare a journal entry to close the balance in manufacturing overhead account (over or under applied manufacturing overhead) to cost of goods sold