 In this presentation, we will enter a journal entry to close out the remaining balance in the factory overhead account. This is typically something that will be done at the end of the period, at the end of the month in our case. We want to do it now because I want to keep it close to some of the other types of journal entries that we've put in for factory overhead. So the story is this, what's happening here is it's the end of the month now. We're not going to have any more jobs. We're not applying any more information or any more costs to the factory overhead. And we're not going to, we've already allocated to all the jobs that we're going to for factory overhead for this month. If we look at the GL account then for factory overhead that supports this number, we could see, you know, there's kind of a lot of activity that happens in factory overhead because it's going to be that bucket that has everything else in it that we couldn't apply to the job. So that's going to include things like indirect labor. It included things like indirect materials that included anything that it was on the factory. We put in the factory overhead. Now our goal here was eventually to apply it to the job using some type of estimate. And we did so, we applied it out to the job, but the estimate was not exact. And again, you might ask like, why wasn't it exact? Why can't we make it exact? We see the number right here. Why didn't we apply out the 7,100? And again, the problem with that is there's a few different problems. But one is that we typically would apply it out as the jobs are happening, not at the end of the month. So in this particular problem, we kind of waited till the end of the month and did this in an order so we can see the costs going into factory overhead and then us applying them out. But we in practice oftentimes will be applying them out to jobs as the jobs are going. And therefore we wouldn't even know, say that this would be the number for the entire month's worth of factory overhead. We wouldn't know that as we're applying it to the job, the things like the rent on the factory, things like utilities, depreciation. Those things wouldn't be recorded till the end of the month. So all we can do is estimate, you know, what we think factory overhead will be at the end of the month. And based on that estimate use some type of ratio analysis to apply this information out to the job. And of course that's an estimate and it's not going to be exact. So we applied out 6,720 when the actual amounts, all the debits are the actual amounts added up to 7,100. We applied out based on our predetermined overhead rate 1.6 of direct labor. We applied out 6,722 jobs. We have 380 that we couldn't apply out to any job. We didn't know which job to put it to. So that's going to happen every time because it's just an estimate. So now our question is, well, what do we do with that? Because we want to start over next month. We would like the factory overhead to be zero next month so that we can start over and work through next month. So we've got to kind of clear this out. This is kind of like a forced temporary account here that we're going to have. And the way we're going to do that is we're going to clear it out to cost of goods sold. We're just going to force it to work. We're going to make it zero. And you might ask, well, why can't that seems not right? Why can we do that? And the reason is one, because hopefully this is a small amount. If it's a large amount, we might have to go back and do some reallocations to it. But if it's a small amount, then we can say it's not material to decision making. If it's not material to decision making, what's the easiest thing to do with it? To record it to an income statement account, because the income statement accounts will close out to retained earnings and they'll go away. They'll just be part of retained earnings after this time period. And we can kind of get rid of it in that way. And again, it's small, so it shouldn't affect net income or our decision making processes or distort our financial statements, hopefully. And therefore it'd be okay to do that. Why income statement account would we choose cost of goods sold? Because ultimately, that's where it would go on the income.