CHECK FIGURE (3) Underapplied by $11,000 (4) NI: $23,000 Almeda Products, Inc. uses a job-order costing system. The company's inventory balances on April 1, the start of its fiscal year, were as follows: Raw materials $52,000 Work in process 40,000 Finished goods 38,000 During the year, the following transactions were completed: a. Raw materials were purchased on account, $170,000. b. Raw materials were issued from the storeroom for use in production, $200.000 (80% direct and 20% indirect). c. Employee salaries and wages were accrued as follows: direct labour, $200,000; indirect labour, $82.000: selling and administrative salaries, $120.000 d. Utility costs were incurred in the factory, $75,000 e. Advertising costs were incurred, $90,000. f. Prepaid insurance expired during the year, $20,000 (70% related to factory operations, and 30% related to selling and administrative activities). g. Depreciation was recorded. $150,000 (80% related to factory assets, and 20% related to selling and administrative assets). Page 116 h. Manufacturing overhead was applied to jobs at the rate of 160% of direct labour cost. i. Goods that cost $700,000 to manufacture according to their job cost sheets were transferred to the finished goods warehouse. j. Sales for the year totalled $1,000,000 and were all on account. The total cost to manufacture these goods according to their job cost sheets was $720,000. Required: 1. Prepare journal entries to record the transactions for the year. 2. Prepare T-accounts for raw materials, work in process, finished goods, manufacturing overhead, and cost of goods sold. Post the appropriate parts of your journal entries to these T-accounts. Compute the ending balance in each account. (Do not forget to enter the beginning balances in the inventory accounts.) 3. Is manufacturing overhead underapplied or overapplied for the year? Prepare a journal entry to close this balance to cost of goods sold. 4. Prepare an income statement for the year. (Do not prepare a schedule of cost of goods manufactured; all of the information needed for the income statement is available in the journal entries and T-accounts you have prepared.)