 In other words, we're going to have indirect materials, indirect labor, and then we typically look at everything else that's not going to be part of materials and labor, and that's going to include anything that has to do with the factory. So in a book problem, anything that refers to the factory will typically be going to overhead as opposed to work and process, and anything involved in the factory as opposed to the administrative office, we can think of the two buildings being separate, then we'll be applied, of course, to the factory overhead as opposed to being a period cost, being a cost that we're going to apply to just just expensing it typically. And these are the ones that actually can be kind of confusing, because again, all the stuff that we applied to overhead right now are stuff that we often think of as expenses, all the stuff that we're talking about really direct material. When we think about materials, especially when we think about wages, we often think of these are kind of expensive. We think of the debit side as being expenses, typically. But that's really because of the matching principle, not just the nature of wages or the nature of the thing. So in this case, we're going to pick up anything that's going to be involved in the factory. We're going to include it in the inventory, but not to a particular job and therefore not to work and process, but to factory overhead. So if we had depreciation on the factory on a factory equipment, we're going to say, okay, depreciation, what's normally the journal entry for depreciation? Normally, we credit depreciation expense and credit accumulated depreciation. And this time, however, we're going to credit accumulated depreciation still, but debit factory overhead. Now that probably looks really weird to many, you know, when we first look at that and we've just probably memorized the journal entry that says depreciation is always recorded as a debit to depreciation expense, a credit to accumulated depreciation. And that's going to be recorded in the decrease in the factory equipment and the use that we've had over time. But why is that the case? Because usually the expense down here represents that we consume something in order to help generate revenue in that time period. We're allocating the cost of the equipment to when we used it, consumed it. In this case, we used it, but we didn't use it to help generate revenue. We used it to make inventory an asset. So therefore we're kind of capitalizing. We're moving the use of that equipment to the cost of the asset. We will expense it when we finally sell the inventory and the form of cost to get sold. So it's going to move to factory overhead. It's going to move to raw material, it's going to move to work and process. And then finally to finished goods. And then we're going to finally sell it. That's when we'll have it. And then anything else like rent, if it's rent on the factory or utilities on the factory or insurance on the factory, these are all things that we might think typically we think of an expense that we would have here. If it was rent expense, if it was rent on the office building and not the factory, then it would be an expense. But here it's going to be something that is on the building, on the factory and therefore overhead. So this is where book problems often will kind of make up an account instead of just paying something like the utilities bill. They might make up an account called payable, utilities payable. Just to show us that just through the journal entry that this deals with utilities, that's why they're doing it. But in practice, usually we would just pay cash. So in essence, if we add these up, our journal entry is basically 1,006 plus the 250 plus the 1,000, that's going to add up to 2,850. That's how much cash we're paying. Again, we probably pay with three separate checks here, but we're basically crediting cash for that amount. And then the debit, we would normally think, well, the debit should go to rent, pay our rent expense, utilities expense. And again, if it was monthly to insurance expense or prepaid insurance, here, we're going to say no, we're paying these not in order to help generate sales in the current period. We're hoping it's going to help generate sales, but not until we sell the inventory sometime in the future. And therefore the debit's going to go to factory overhead. So we're going to put this in the factory overhead. And again, it's going to go up here, we are going to expense it, but not in the form of we're never going to see utilities expense on the factory, because the utilities expense is included in the inventory. And when we expense it, it'll be in the form of cost of goods sold, which is an expense, not in the form of utilities expense. So any utilities we pay on the administrative office will expense them because we use the administrative office in order to help us generate revenue, it's a period cost. Any utilities expense on the factory, however, is going to be part of the inventory, which we'll put in the factory overhead. We're going to allocate finally to work in process. We'll finish that inventory and then we'll sell it, expensing it in the form of cost of goods sold. So if we look at these journal entries, then we're going to debit factory overhead. Here's factory overhead. It was at 1,750, we're going to increase it by 2,500 to 4,250, and we're going to credit accumulated depreciation, which was at 1,053, crediting it, making the counter asset account, the credit balance account go up by 2,500 to 1,055,500. That's what's on the trial balance. Then we're going to debit factory overhead by the 2,850. So here's the 2,850, so the 4,750 going up by 2,850 to 7,100, that being represented on the trial balance. Then the cash is going down from 4,8000 by 2,850 to 450,150, and that is going to be what's on the trial balance. So in essence, we're recording these, which again normally we would think of as kind of expense type of transactions if it was a service company or a merchandising company, but because it's on the warehouse, I mean not on the warehouse on the factory, because as part of the factory process, it's going to be included in an asset, capitalized as an asset, first in factory overhead because we don't know which job to post it to. We don't know where to post it to and so if we did, it would go to work and process, but we don't know which job it to apply it to. So we're going to first put it into this bucket. So this bucket now, factory overhead, has all this stuff in it. Everything we think that should be included in the cost of inventory, but we don't know which inventory. Everything that should have been included in the cost of a guitar, the cost of a construction job, but we don't know which construction job is here. Then we're going to allocate it some way. So we're going to have to use some basis to allocate this out. And how are we going to do that? Why can't we just allocate it evenly because we have goods that are not the same. All of our stuff is different. If we have construction jobs, all the jobs are different sizes, wouldn't be proper to allocate this cost evenly to the jobs because all the jobs are going to be different. So we have to basically estimate how much to allocate. And that's going to be our future project.