Star Videos, Incorporated, produces short musical videos for sale to retail outlets. The companys balance sheet accounts as of January 1 are given below.

Star Videos, Incorporated
Balance Sheet
January 1
Assets
Cash		$ 91,200
Accounts receivable		109,400
Inventories:
Raw materials (film, costumes)	$ 12,000
Videos in process	51,600
Finished videos awaiting sale	86,600	150,200
Prepaid insurance		10,600
Studio and equipment (net)		627,000
Total assets		$ 988,400
Liabilities and Stockholders Equity
Accounts payable		$ 234,000
Retained earnings		754,400
Total liabilities and stockholders equity		$ 988,400

Because the videos differ in length and in complexity of production, the company uses a job-order costing system to determine the cost of each video produced. Studio (manufacturing) overhead is charged to videos on the basis of camera-hours of activity. The companys predetermined overhead rate for the year ($40 per camera-hour) is based on a cost formula that estimated $280,000 in manufacturing overhead for an estimated allocation base of 7,000 camera-hours. Any underapplied or overapplied overhead is closed to cost of goods sold. The following transactions were recorded for the year:

a. Film, costumes, and similar raw materials purchased on account, $226,000.

b. Film, costumes, and other raw materials issued to production, $232,500 (85% of this material was considered direct to the videos in production, and the other 15% was considered indirect).

c. Utility costs incurred (on account) in the production studio, $84,800.

d. Depreciation recorded on the studio, cameras, and other equipment, $83,600. Three-fourths of this depreciation related to actual production of the videos, and the remainder related to equipment used in marketing and administration.

e. Advertising expense incurred (on account), $145,000.

f. Salaries and wages paid in cash as follows:

Direct labor (actors and directors)	$ 100,600
Indirect labor (carpenters to build sets, costume designers, and so forth)	$ 93,000
Administrative salaries	$ 106,400

g. Prepaid insurance expired during the year, $9,400 (70% related to production of videos, and 30% related to marketing and administrative activities).

h. Miscellaneous marketing and administrative expenses incurred (on account), $12,750.

i. Studio (manufacturing) overhead was applied to videos in production. The company recorded 7,250 camera-hours of activity during the year.

j. Videos that cost $500,000 to produce according to their job cost sheets were transferred to the finished videos warehouse to await sale and shipment.

k. Sales for the year totaled $1,080,000 and were all on account.

l. The total cost to produce the videos that were sold according to their job cost sheets was $540,450.

m. Collections from customers during the year totaled $1,030,000.

n. Payments to suppliers on account during the year, $534,000.

o. Underapplied or overapplied overhead $__?__.

Required:

1. Prepare a transaction analysis that records all of the above transactions.

2. Prepare a schedule of cost of goods manufactured for the year.

3. Prepare a schedule of cost of goods sold for the year.

4. Prepare an income statement for the year.