Froya Fabrikker A/S of Bergen, Norway, is a small company that manufactures specialty heavy equipment for use in North Sea oil fields. The company uses a job-order costing system that applies manufacturing overhead cost to jobs on the basis of direct labor- hours. Its predetermined overhead rate was based on a cost formula that estimated $372,000 of manufacturing overhead for an estimated allocation base of 1,200 direct labor-hours. The following transactions took place during the year a. Raw materials purchased on account, $240,000. b. Raw materials used in production (all direct materials), $225,000 c. Utility bills incurred on account, $67,000 (95% related to factory operations, and the remainder related to selling and administrative activities) d. Accrued salary and wage costs Direct labor (1,275 hours) Indirect labor 270,000 $ 98,000 150,000 Selling and administrative salaries e. Maintenance costs incurred on account in the factory, $62,000 f Advertising costs incurred on account, $144,000. g. Depreciation was recorded for the year, $80,000 (85% related to factory equipment, and the remainder related to selling and administrative equipment) h. Rental cost incurred on account, $105,000 (90% related to factory facilities, and the remainder related to selling and administrative facilities) i. Manufacturing overhead cost was applied to jobs, $ j. Cost of goods manufactured for the year, $850,000 k. Sales for the year (all on account) totaled $1,600,000. These goods cost $880,000 according to their job cost sheets The balances in the inventory accounts at the beginning of the year were: Raw Materials $38,000 $ 29,000 $68,000 Work in Process Finished Goods Required: 1. Prepare journal entries to record the preceding transactions. 2. Post your entries to T-accounts. (Don't forget to enter the beginning inventory balances above.) 3. Prepare a schedule of cost of goods manufactured. 4A. Prepare a journal entry to close any balance in the Manufacturing Overhead account to Cost of Goods Sold. 4B. Prepare a schedule of cost of goods sold. 5. Prepare an income statement for the year. Req 4A Req 1 Req 2 Req 3 Req 4B Req 5 Prepare journal entries to record the preceding transactions. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet 4 6 12 The raw materials were purchased for use in production, $240,000 on account Note: Enter debits before credits Debit Transaction General Journal Credit Record entry Clear entry View general journal Journal entry worksheet 2 4 6 7 12 The row materais usdnton (ai dret materais, s225,000. Note: Enter debits before credits. Transaction General Journal Debit Credit b. Record entry Clear entry View general journal 2 3 4 6 7 12 The utility bills were incurred on account, $67,000 (95% related to factory operations, and the remainder related to selling and administrative activities). Note: Enter debits before credits Credit Debit Transaction General Journal C. Record entry Clear entry View general journal 4 6 12 The salary and wage costs accrued were $270,000 (Direct labor), $98,000 (Indirect labor), $150,000 (Selling and administrative salaries) Note: Enter debits before credits. Credit General Journal Transaction Debit d. Record entry Clear entry View general journal 12 2 4 6 7 The maintenance costs were incurred on account in the factory, $62,000 Note: Enter debits before credits. Debit Transaction General Journal Credit e. Journal entry worksheet 12 4 6 7 The advertising costs were incurred on account, $144,000. Note: Enter debits before credits. Debit Transaction General Journal Credit Record entry Clear entry View general journal 2 3 4 6 8 12 The depreciation was recorded for the year, $80,000 (85% related to factory equipment, and the remainder related to selling and administrative equipment) Note: Enter debits before credits. Debit Credit Transaction General Journal g. Record entry Clear entry View general journal The entry for rental cost incurred on account on buildings, $105,000 (90% related to factory facilities, and the remainder related to selling and administrative facilities). Note: Enter debits before credits. Debit Transaction General Journal Credit h. Record entry Clear entry View general journal 4 12 6 8 The entry for manufacturing overhead cost applied to jobs Note: Enter debits before credits. General Journal Debit Transaction Credit Clear entry Record entry View general journal 6 7 8 9 10 12 The cost of goods manufactured for the year, s850,o00. Note: Enter debits before credits. Debit Transaction General Journal Credit K1 .. .. 5678910 11 12 The sales for the year (all on account) totaled $1,600,000 Note: Enter debits before credits. Debit Transaction General Journal Credit 6 8 10 12 The goods cost $880,000 according to their job cost sheets Note: Enter debits before credits. Debit Credit Transaction General Journal k(2)