The Winston Company estimates that the factory overhead for the following year will be $653,400. The company has decided that the basis for applying factory overhead should be machine hours, which is estimated to be 36,300 hours. The total machine hours for the year was 55,000 hours. The actual factory overhead for the year was $1,004,000.

(a) Determine the total factory overhead amount applied.

Total factory overhead applied

(b) Calculate the overapplied or underapplied amount for the year. Enter the amount as positive values.

Factory overhead selector 1

underapplied OR

overapplied

(c) Prepare the journal entry to close Factory Overhead into Cost of Goods Sold on December 31. Refer to the Chart of Accounts for exact wording of account titles.

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JOURNAL

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT
1
2

Solution

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT
1
2

CHART OF ACCOUNTS

Winston Company

General Ledger

	ASSETS
110	Cash
121	Accounts Receivable
131	Materials
133	Work in Process
135	Factory Overhead
137	Finished Goods
141	Supplies
142	Prepaid Expenses
181	Land
190	Factory Equipment
191	Accumulated Depreciation

	LIABILITIES
210	Accounts Payable
221	Utilities Payable
251	Wages Payable

	EQUITY
311	Common Stock
340	Retained Earnings
351	Dividends
390	Income Summary

	REVENUE
410	Sales
610	Interest Revenue

	EXPENSES
510	Cost of Goods Sold
520	Wages Expense
531	Insurance Expense
532	Utilities Expense
533	Office Supplies Expense
560	Depreciation Expense
590	Miscellaneous Expense
710	Interest Expense