2 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 $373,700 of manufacturing overhead for an estimated allocation base of 1,010 direct labor-hours. The following transactions took place during the year: 7 points a. Raw materials purchased on account, $255,000 b. Raw materials used in production (all direct materials), $240,000 C. Utility bills incurred on account, $70,000(95% related to factory operations, and the remainder related to selling and administrative eBook activities) d. Accrued salary and wage costs: Print Direct labor (1,085 hours) Indirect labor Selling and administrative salaries 285,000 101,000 165,000 References e. Maintenance costs incurred on account in the factory, $65,000 f. Advertising costs incurred on account, $147,000 g. Depreciation was recorded for the year, $83,000 (80% related to factory equipment, and the remainder related to selling and administrative equipment) h. Rental cost incurred on account, $108,000 (85% 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, $880,000 k. Sales for the year (all on account) totaled $1,750,000. These goods cost $910,000 according to their job cost sheets 2 The balances in the inventory accounts at the beginning of the year were: Raw Materials Work in Process Finished Goods 41,000 32,000 71,000 7 points 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 eBook 48. Prepare a schedule of cost of goods sold Print 5. Prepare an income statement for the year