Bonita Guitar Company makes high-quality customized guitars. Bonita uses a job order costing system. Because the guitars are handmade, the company applies overhead based on direct labor hours. At the beginning of the year, the company estimated that total) manufacturing overhead costs would be $306,000 and that 20,400 direct labor hours would be worked. At year-end, Edward, the company's founder and CEO, gives you the following information regarding Bonita's operations. 1. The beginning balances in the inventory accounts were: Raw Materials Inventory $7,600 Work in Process Inventory $25,600 Finished Goods Inventory $31,500 2. During the year, the company purchased raw materials costing $103,000. All purchases were made on account. 3. The production department requisitioned $103,000 of raw materials for use in production. Of those, 70% were direct materials and 30% were indirect materials. 4. The company used 21,000 direct labor hours at a cost of $15 per hour during the year (credit Wages Payable). 5. The company used 7,000 indirect labor hours at a cost of $9 per hour (credit Wages Payable). 6. The company paid $177,800 for insurance, utilities, and property taxes on the factory. 7. The company recorded factory depreciation of $40,200. 8. The company applied manufacturing overhead to inventory based on the 21.000 labor hours actually worked during the year, 9. Products costing $660,000 were completed during the year and transferred to the Finished Goods Inventory. 10. During the year, the company sold products costing a total of $668,000. 11. The company closes under- and overapplied overhead to Cost of Goods Sold. No. Account Titles and Explanation 1. No Entry 2. Raw Materials Inventory Accounts Payable (To record raw materials purchases) 3. Work in Process Inventory 4. 5. Manufacturing Overhead Raw Materials Inventory (To record use of direct and indirect materials in production) Work in Process Inventory Wages Payable (To record direct labor payroll) Manufacturing Overhead Debit Credit 6. 7. Wages Payable (To record indirect labor payroll) Manufacturing Overhead Cash (To record other manufacturing overhead incurred) Manufacturing Overhead Accumulated Depreciation (To record factory depreciation) 8. Work in Process Inventory Manufacturing Overhead (To apply manufacturing overhead) 9. Finished Goods Inventory 10. Work in Process Inventory (To record transfer of completed products to finished goods) Cost of Goods Sold 10 10. Cost of Goods Sold Finished Goods Inventory (To record cost of sales) Manufacturing Overhead 11. Cost of Goods Sold I (To dispose of overapplied overhead)