Check my work 1 Supreme Videos, Inc., produces short musical videos for sale to retail outlets. The company's balance sheet accounts as of January 1, are given below. 3.34 points $ 65,000 104,000 eBook References $ 32,000 47,000 83,000 Supreme Videos, Inc. Balance Sheet January 1 Assets Current assets: Cash Accounts receivable Inventories: Raw materials (film, costumes) Videos in process Finished videos awaiting sale Prepaid insurance Total current assets Studio and equipment Less accumulated depreciation Total assets Liabilities and Stockholders' Equity Accounts payable Capital stock Retained earnings Total liabilities and stockholders' equity 162,000 9,400 340,400 734,000 212,000 522,000 $862,400 $168,400 $422,000 272,000 694,000 $862,400 M. Check my work 1 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 is based on a cost formula that estimated $287,000 in manufacturing overhead for an estimated allocation base of 7,000 camera-hours. The following transactions occurred during the year: 34 ints eBook References a. Film, costumes, and similar raw materials purchased on account, $187,000. b. Film, costumes, and other raw materials used in production, $202,000 (85% of this material was considered direct to the videos in production, and the other 15% was considered indirect). c. Utility costs incurred in the production studio, $74,000. d. Depreciation recorded on the studio, cameras, and other equipment, $86,000. Three-fourths of this depreciation related to production of the videos, and the remainder related to equipment used in marketing and administration. e. Advertising expense incurred on account, $132,000. f. Costs for salaries and wages were incurred as follows: $ 84,000 Direct labor (actors and directors) Indirect labor (carpenters to build sets, costume designers, and so forth) Administrative salaries $ 112,000 $ 97,000 check my work 1 3.34 points g. Prepaid insurance expired during the year, $7,200 (80% related to production of videos, and 20% related to marketing and administrative activities). h. Miscellaneous marketing and administrative expenses incurred, $8,800. i. Studio (manufacturing) overhead was applied to videos in production. The company used 7,250 camera-hours 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 $929,000 and were all on account. The total cost to produce these videos according to their job cost sheets was $602,000. 1. Collections from customers during the year totaled $852,000. m. Payments to suppliers on account during the year, $502,000; payments to employees for salaries and wages, $287,000. eBook References Required: 1. Prepare a T-account for each account on the company's balance sheet and enter the beginning balances. 2. Record the transactions directly into the T-accounts. Key your entries to the letters (a) through (m) above. 3. Is the Studio (manufacturing) Overhead account underapplied or overapplied for the year? By how much? 4. Prepare a schedule of cost of goods manufactured. 5. Prepare a schedule of cost of goods sold. 6. Prepare an income statement for the year. Complete this question by entering your answers in the tabs below. Mc 6. Prepare an income statement for the year. Complete this question by entering your answers in the tabs below. Req 1 and 2 Req 3 Req 4 Reg 5 Reg 6 Is the Studio (manufacturing) Overhead account underapplied or overapplied for the year? By how much? Manufacturing overhead was by for the year. Prepare a schedule of cost of goods manufactured. Supreme Videos, Inc. Schedule of Cost of Goods Manufactured Direct materials: Total raw materials available Raw materials used in production Direct materials used in production Total manufacturing costs added to production Total manufacturing costs to account for Cost of goods manufactured Prepare a schedule of cost of goods sold. Supreme Videos, Inc. Schedule of Cost of Goods Sold