Froya Fabrikker A$/$S of Bergen, Norway, is a small company that manufactures specialty heavy equipment for use in North Sea oll

fields. The company uses a job$-$order costing system that applies manufacturing overhead cost to jobs on the basis of direct labor$-$

hours. Its predetermined overhead rate was based on a cost formula that estimated $$329,000$ of manufacturing overhead for an

estimated allocation base of $940$ direct labor$-$hours. The following transactions took place during the year:

a$.$ Raw materials purchased on account, $$205,000.$

b$.$ Raw materials used in production $($all direct materials$),$ $$190,000.$

c$.$ Utility bills Incurred on account, $$60,000(90\%$ related to factory operations, and the remainder related to selling and administrative

activities$).$

d$.$ Accrued salary and wage costs:

e$.$ Maintenance costs incurred on account in the factory, $$55,000$

f$.$ Advertising costs incurred on account, $$137,000.$

g$.$ Depreciation was recorded for the year, $$85,000(70\%$ related to factory equipment, and the remainder related to selling and

administrative equipment$).$

h$.$ Rental cost Incurred on account, $$110,000(75\%$ related to factory facilities, and the remainder related to selling and administrative

facilities$).$

I. Manufacturing overhead cost was applied to jobs, $$?$

J$.$ Cost of goods manufactured for the year, $$780,000.$

k$.$ Sales for the year $($all on account$)$ totaled $$1,250,000.$ These goods cost $$810,000$ according to their job cost sheets.

The balances in the inventory accounts at the beginning of the year were:

Required:

Prepare journal entries to record the preceding transactions.

Post your entries to T$-$accounts. $($Don$\text{'}$t forget to enter the beginning inventory balances above.$)$

Prepare a schedule of cost of goods manufactured.

$4$A$.$ Prepare a journal entry to close any balance in the Manufacturing Overhead account to Cost of Goods Sold.

$4$B$.$ Prepare a schedule of cost of goods sold.

Prepare an income statement for the year.