Assets Cash Accounts receivable Inventories: Raw materials (film, costumes) Videos in process Finished videos awaiting sale Prepaid insurance Studio and equipment (net) Star Videos, Inc. Balance Sheet January 1 Total assets Liabilities and Stockholders' Equity Accounts payable Retained earnings Total liabilities and stockholders' equity $ 26,400 51,000 87,800 $ 90,800 104,200 165,200 8,550 568,000 $ 936,750 $ 244,000 692,750 $ 936,750 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 company's 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, $214,000. b. Film, costumes, and other raw materials issued to production, $230,000 (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, $91,800. d. Depreciation recorded on the studio, cameras, and other equipment, $96,400. 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), $149,000. f. Salaries and wages paid in cash as follows: Direct labor (actors and directors) $ 90,400 Indirect labor (carpenters to build sets, costume designers, and so forth) Administrative salaries $ 83,500 $113,200 g. Prepaid insurance expired during the year, $7,800 (70% related to production of videos, and 30% related to marketing and administrative activities). h. Miscellaneous marketing and administrative expenses incurred (on account), $9,900. 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 $552,000 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 $1,110,000 and were all on account. I. The total cost to produce the videos that were sold according to their job cost sheets was $596,090. m. Collections from customers during the year totaled $1,060,000. n. Payments to suppliers on account during the year, $610,000. o. Underapplied or overapplied overhead $ ? Required: 1. Prepare a transaction analysis that records all of the above transactions. Calculate the ending balances at December 31 for all balance sheet accounts. 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. Required 1 Required 2 Required 3 Required 4 Prepare a transaction analysis that records all of the above transactions. Calculate the ending balances at December 31 for all balance sheet accounts. (Amounts to be deducted should be indicated by a minus sign.) Raw Materials Star Videos, Inc. Transaction Analysis For the Year Ended December 31 Retained Earnings Studio & Cash Accounts Receivable Videos in Process Finished Videos Manufacturing Overhead Prepaid Insurance Equipment = (net) Accounts Payable Beginning balance @1/1 $ 90,800 $ 104,200 $ 26,400 $ 51,000 $ 87,800 $ 8,550 $ 568,000 = $ 244,000 $ 692,750 (a) Raw material purchases (b) Raw materials used 214,000 (230,000) = 214,000 195,500 (c) Utility costs (d) Depreciation charges 34,500 91,800 72,300 (e) Advertising (f) Salaries & wages (287,100) 90,400 (g) Prepaid insurance 83,500 5,460 (7,800) (h) Miscellaneous marketing (i) Applied overhead (i) Transfer completed videos to finished goods (k) Sales 290,000 (552,000) (290,000) 552,000 1,110,000 = 91,800 (96,400) = (24,100) = 149,000 (149,000) (113,200) = (2,340) = 9,900 (9,900) = = 1,110,000 (596,090) (1) (m) (n) Transfer finished goods to cost of goods sold Cash collections from customers (596,090) = Payment to suppliers 1,060,000 (610,000) (1,060,000) = (610,000) (0) 2,440 = 2,440 Ending balances @ 12/31 $ 253,700 $ 154,200 $ 10,400 S 74,900 S 43,710 0 750 $ 471,600 = $ 98,700 $ 910,560 Required 1 Required 2 Required 3 Required 4 Prepare a schedule of cost of goods manufactured for the year. Star Videos, Inc. Schedule of Cost of Goods Manufactured For the Year Ended December 31 Beginning raw materials inventory $ 26,400 Add: Purchases of raw materials 214,000 Raw materials available 240,400 Less: Ending raw materials inventory 10,400 Raw materials used in production 230,000 Less: Indirect materials included in overhead 34,500 $ 195,500 Direct labor Manufacturing overhead applied to videos in process Total manufacturing costs Add: Beginning videos in process 90,400 290,000 575,900 51,000 626,900 Less: Ending videos in process Cost of goods manufactured 74,900 $ 552,000 < Required 1 Required 3 > Answer is not complete. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Prepare a schedule of cost of goods sold for the year. Star Videos, Inc. Schedule of Cost of Goods Sold For the Year Ended December 31 Beginning finished videos inventory $ 87,800 Cost of goods manufactured 552,000 Cost of goods available for sale 639,800 Less: Ending finished videos inventory 43,710 596,090 Adjusted cost of goods sold $ 596,090 < Required 2 Required 4 > Answer is not complete. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Prepare an income statement for the year. Star Videos, Inc. Income Statement For the Year Ended December 31 Sales Cost of goods sold Gross margin Selling and administrative expenses Net operating income $ 1,110,000 593,650 516,350 298,540 $ 217,810