Froya Fabrikker A$/$S of Bergen, Norway, manufactures specialty heavy equipment for use in North Sea oil fields. The

company uses a job$-$order costing system that applies manufacturing overhead cost to jobs based on direct labor$-$

hours. Its predetermined overhead rate was based on a cost formula that estimated $$336,000$ of manufacturing

overhead for an estimated allocation base of $1,050$ direct labor$-$hours. The following transactions occurred during the

year:

a$.$ Raw materials purchased on account, $$245,000.$

b$.$ Raw materials used in production $($all direct materials$),$ $$230,000.$

c$.$ Utility bills incurred on account, $$68,000(85\%$ related to factory operations, and the remainder related to selling and

administrative activities$).$

d$.$ Accrued salary and wage costs:

Direct labor $(1,125$ hours$)$ $ $275,000$

Indirect labor $ $99,000$

Selling and administrative $ $155,000$

salaries

e$.$ Maintenance costs incurred on account in the factory, $$63,000$

f$.$ Advertising costs incurred on account, $$145,000.$

g$.$ Depreciation recorded for the year, related to factory equipment, and the remainder related to selling

and administrative equipment$).$

h$.$ Rental cost incurred on account, $$106,000(75\%$ related to factory facilities, and the remainder related to selling and

administrative facilities$).$

i$.$ Manufacturing overhead cost applied to jobs, $ $?.$

j$.$ Cost of goods manufactured, $$860,000.$

k$.$ Sales for the year $($all on account$)$ totaled $$1,650,000.$ These goods cost $$890,000$ according to their job cost sheets.

The beginning balances in the inventory accounts 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.