Brinkerhoff, Inc., designs and fabricates display units for use at conventions. The companys balance sheet as of January 1, the beginning of the current year, appears below:

Brinkerhoff, Inc. Balance Sheet January 1
Assets
Current assets:
Cash		$13,000
Accounts receivable		45,000
Inventories:
Raw materials	$38,000
Work in process	30,000
Finished goods (props awaiting shipment)	45,000	113,000
Prepaid insurance		5,300
Total current assets		176,300
Buildings and equipment	510,000
Less accumulated depreciation	210,000	300,000
Total assets		$476,300
Liabilities and Stockholders' Equity
Accounts payable		$73,000
Common stock	$230,000
Retained earnings	173,300	403,300
Total liabilities and stockholders' equity		$476,300

Because each display unit is a unique design and may require anything from a few hours to a month or more to complete, Brinkerhoff, Inc. uses a job-order costing system. Overhead in the fabrication shop is charged to display units on the basis of direct labor cost. The companys predetermined overhead rate for the year is based on a cost formula that estimated $99,000 in manufacturing overhead for an estimated allocation base of $110,000 direct labor dollars. The following transactions were recorded during the year (Assume all purchases and services were acquired on account):

a.	Raw materials, such as wood, paints, and metal sheeting, were purchased on account, $82,000.
b.	Raw materials were issued to production, $93,000; $5,600 of this amount was for indirect materials.
c.	Payroll costs incurred and paid: direct labor, $125,000; indirect labor, $49,500; and selling and administrative salaries, $71,000.
d.	Fabrication shop utilities costs incurred, $14,000.
e.	Depreciation recorded for the year, $23,000 ($4,200 on selling and administrative assets; $18,800 on fabrication shop assets).
f.	Prepaid insurance expired, $4,600 ($3,400 related to fabrication shop operations, and $1,200 related to selling and administrative activities).
g.	Shipping expenses incurred, $41,000.
h.	Other manufacturing overhead costs incurred, $17,800 (credit Accounts Payable).
i.	Manufacturing overhead was applied to production. Overhead is applied on the basis of direct labor cost.
j.	Display units that cost $281,000 to produce according to their job cost sheets were completed.
k.	Sales for the year totaled $530,000 and were all on account. The total cost to produce these display units was $250,000 according to their job cost sheets.
l.	Collections on account from customers, $415,000.
m.	Payments on account to suppliers, $141,000.

Required:
1&2.	Prepare a T-account for each account on the companys balance sheet, and enter the beginning balances. Make an entry directly into the T-accounts for transactions (a) through (m). Determine an ending balance for each T-account.

3-a.	Was manufacturing overhead underapplied or overapplied for the year?

3-b.	Prepare a journal entry to close any balance in the Manufacturing Overhead account to Cost of Goods Sold. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

4.	Prepare an income statement for the year.