Froya Fabrikker A/S of Bergen, Norway, is a small company thatmanufactures specialty heavy equipment for use in North Sea oilfields. The company uses a job-order costing system that appliesmanufacturing overhead cost to jobs on the basis of directlabor-hours. Its predetermined overhead rate was based on a costformula that estimated $336,000 of manufacturing overhead for anestimated allocation base of 1,050 direct labor-hours. Thefollowing transactions took place during the year:

1. Raw materials purchased on account, $225,000.
2. Raw materials used in production (all direct materials),$210,000.
3. Utility bills incurred on account, $58,000 (95% related tofactory operations, and the remainder related to selling andadministrative activities).
4. Accrued salary and wage costs:

Direct labor (1,125 hours)	$	255,000
Indirect labor	$	95,000
Selling and administrative salaries	$	135,000

1. Maintenance costs incurred on account in the factory,$59,000
2. Advertising costs incurred on account, $141,000.
3. Depreciation was recorded for the year, $89,000 (70%related to factory equipment, and the remainder related to sellingand administrative equipment).
4. Rental cost incurred on account, $114,000 (75%related to factory facilities, and the remainder related to sellingand administrative facilities).
5. Manufacturing overhead cost was applied to jobs,$ ? .
6. Cost of goods manufactured for the year,$820,000.
7. Sales for the year (all on account) totaled$1,450,000. These goods cost $850,000 according to their job costsheets.

The balances in the inventory accounts at the beginning of theyear were:

Raw Materials	$	35,000
Work in Process	$	26,000
Finished Goods	$	65,000

Required:

1. Prepare journal entries to record the precedingtransactions.

2. Post your entries to T-accounts. (Don’t forget to enter thebeginning inventory balances above.)

3. Prepare a schedule of cost of goods manufactured.

4A. Prepare a journal entry to close any balance in theManufacturing Overhead account to Cost of Goods Sold.

4B. Prepare a schedule of cost of goods sold.

5. Prepare an income statement for the year.