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Froya Fabrikker A$/$S of Bergen, Norway, 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 based on direct labor$-$hours. Its predetermined overhead

rate was based on a cost formula that estimated $$360,000$ of manufacturing overhead for an estimated allocation base of $900$ direct

labor$-$hours. The following transactions occurred during the year:

a$.$ Raw materials purchased on account, $$200,000.$

p$.$ Raw materials used in production $($all direct materials$),$ $$185,000.$

c$.$ Utility bills incurred on account, $$70,000(90\%$ related to factory operations, and the remainder related to selling and administrative

activities$).$

d$.$ Accrued salary and wage costs:

Direct labor $(975$ hours$)$

Indirect labor

$$230,000$

$$110,000$

e$.$ Maintenance costs incurred on account in the factory, $$54,000.$

f$.$ Advertising costs incurred on account, $$136,000.$

g$.$ Depreciation recorded for the year, related to factory equipment, and the remainder related to selling and

administrative equipment$).$

h$.$ Rental cost incurred on account, $$120,000(85\%$ related to factory facilities, and the remainder related to selling and administrative

facilities$).$

i$.$ Manufacturing overhead cost applied to jobs, $$\_?$

j$.$ Cost of goods manufactured, $$770,000.$

k$.$ Sales $($all on account$)$ totaled $$1,200,000.$ These goods cost $$800,000$ according to their job cost sheets.

The beginning balances in the inventory accounts were:

Raw Materials

Work in Process

Finished Goods

Required:

Prepare journal entries to record the preceding transactions.

Post your entries to T$-$accounts. $($Don$\text{'}$t forget to enter the beginning inventory balances above.$)$

Prepare a schedule of cost of goods manufactured.

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

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

Prepare an income statement.

Complete this question by entering your answers in the tabs below.

Prepare journal entries to record the preceding transactions.

Notes: If no entry is required for a transaction$/$event$,$ select $"$No journal entry required" in the first account field.

Journal entry worksheet

The raw materials were purchased for use in production, $$200,000$ on account.

Note: Enter debits before credits.

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