The question is incomplete. The complete question is :
A company's Factory Overhead T-account shows total debits of $630, 000 and total credits of $716,000 at the end of the year. Determine whether there is over- or underapplied overhead using the T-account below. Prepare the journal entry to close the balance in the Factory Overhead account to Cost of Goods Sold.
Solution :
The credit of the factory overhead means Applied overhead and the debit of the factory overhead is the actual overhead incurred.
Here, applied overhead is more than the actual overhead incurred so it is the factory overheads the over appalled.
The Factory overheads
Amount($) Amount($)
Actual overhead 630,000 Applied overhead 716,000
Over applied 86,000
Journal entry to close balance in factory overhead
Account title and explanation Debit($) Credit($)
Factor overheads 86,000
Cost of goods sold 86,000
