3-15 (Algo) Journal Entries; T-Accounts; Financial Statements [LO3-1, LO3-2, LO3-3, LO3-4] Froya Fabrikker A/S of Bergen, Norway, is a small company that manufactures specialty heavy equipment for use in North Sea of 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 $350,000 of manufacturing overhead for an estimated allocation base of 1,000 direct labor-hours. The following transactions took place during the year: a. Raw materials purchased on account, $250,000. b. Raw materials used in production (all direct materials), $235,000 c. Utility bills incurred on account, $69,000 (90% related to factory operations, and the remainder related to selling and administrative activities). d. Accrued salary and wage costs: Direct labor (1,075 hours) Indirect labor Selling and administrative salaries 4 $ 280,000 5 100,000 $ 160,000 e Maintenance costs incurred on account in the factory, $64,000 t Advertising costs incurred on account, $146,000. 9. Depreciation was recorded for the year, $82.000 (75% related to factory equipment, and the remainder related to selling and administrative equipment) h Rental cost incurred on account, $107.000 (80% related to factory facilities, and the remainder related to selling and administrative facilities) 1 Manufacturing overhead cost was applied to jobs, $_? JCost of goods manufactured for the year, $870,000 Sales for the year jall on account) totaled $1,700.000. These goods cost $900,000 according to their job cost sheets The balances in the inventory accounts at the beginning of the year were Raw Materials Work in Process Finished Goods Required: $ 40,000 $ 31,000 $ 70,000 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