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Froya Fabrikker A / S of Bergen, Norway, manufactures specialty heavy equipment for use in North Sea oil fields. The company uses a job -

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 $374,000 of manufacturing overhead for an estimated allocation base of 1,100 direct labor-hours. The following transactions occurred during the year:
Raw materials purchased on account, $235,000.
Raw materials used in production (all direct materials), $220,000.
Utility bills incurred on account, $66,000(90% related to factory operations, and the remainder related to selling and administrative activities).
Accrued salary and wage costs:
Direct labor (1,175 hours) $ 265,000
Indirect labor $ 97,000
Selling and administrative salaries $ 145,000
Maintenance costs incurred on account in the factory, $61,000
Advertising costs incurred on account, $143,000.
Depreciation recorded for the year, $91,000(80% related to factory equipment, and the remainder related to selling and administrative equipment).
Rental cost incurred on account, $116,000(85% related to factory facilities, and the remainder related to selling and administrative facilities).
Manufacturing overhead cost applied to jobs, $?question mark.
Cost of goods manufactured, $840,000.
Sales for the year (all on account) totaled $1,550,000. These goods cost $870,000 according to their job cost sheets.
The beginning balances in the inventory accounts were:
Raw Materials $ 37,000
Work in Process $ 28,000
Finished Goods $ 67,000
Required:
1. Prepare journal entries to record the preceding transactions.
2. Post your entries to T-accounts. (Dont forget to enter the beginning inventory balances above.)
3. Prepare a schedule of cost of goods manufactured.
4A. Prepare a journal entry to close any balance in the Manufacturing Overhead account to Cost of Goods Sold.
4B. Prepare a schedule of cost of goods sold.
5. Prepare an income statement.

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