Froya Fabrikker A S of Bergen, Norway, is a small company that 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 on the basis of direct labor hours Its predetermined overhead rate was based on a cost formula that estimated $349,800 of manufacturing overhead for an estimated allocation base of 1,060 direct labor hours The following transactions took place during the year Raw materials purchased on account, $230,000 Raw materials used in production (all direct materials), $215,000 Utility bills incurred on account, $65,000 (85 related to factory operations, and the remainder related to selling and administrative activities) Accrued salary and wage costs Direct labor (1,135 hours) $ 260,000 Indirect labor $ 96,000 Selling and administrative salaries $ 140,000 Maintenance costs incurred on account in the factory, $60,000 Advertising costs incurred on account, $142,000 Depreciation was recorded for the year, $90,000 (75 related to factory equipment, and the remainder related to selling and administrative equipment) Rental cost incurred on account, $115,000 (80 related to factory facilities, and the remainder related to selling and administrative facilities) Manufacturing overhead cost was applied to jobs, $ Cost of goods manufactured for the year, $830,000 Sales for the year (all on account) totaled $1,500,000 These goods cost $860,000 according to their job cost sheets The balances in the inventory accounts at the beginning of the year were Raw Materials $ 36,000 Work in Process $ 27,000 Finished Goods $ 66,000 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 for the year Accounts Receivable Sales Beo Bal Beg Bal End Bal End Bal Raw Materials Cost of Goods Sold Beg Bal End Bal Work in Process Manufacturing Overhead Beg Bal End Bal Finished Goods Advertising Expense End Bal Accumulated Depreciation Utilities Expense Bea Bal Beg Bal End Bal Accounts Payable Salaries Expense Beg Bali Beg Bal End Bal Depreciation Expense Salaries Wages Payable Beg Bal Beg Bal End Bal End Bal Rent Expense Beg Bal End Sal

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

Froya Fabrikker A/S of Bergen, Norway, is a small company that 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 on the basis of direct labor-hours. Its predetermined overhead rate was based on a cost formula that estimated $349,800 of manufacturing overhead for an estimated allocation base of 1,060 direct labor-hours. The following transactions took place during the year:

Raw materials purchased on account, $230,000.
Raw materials used in production (all direct materials), $215,000.
Utility bills incurred on account, $65,000 (85% related to factory operations, and the remainder related to selling and administrative activities).
Accrued salary and wage costs:


Direct labor (1,135 hours)	$	260,000
Indirect labor	$	96,000
Selling and administrative salaries	$	140,000

Maintenance costs incurred on account in the factory, $60,000
Advertising costs incurred on account, $142,000.
Depreciation was recorded for the year, $90,000 (75% related to factory equipment, and the remainder related to selling and administrative equipment).
Rental cost incurred on account, $115,000 (80% related to factory facilities, and the remainder related to selling and administrative facilities).
Manufacturing overhead cost was applied to jobs, $?.
Cost of goods manufactured for the year, $830,000.
Sales for the year (all on account) totaled $1,500,000. These goods cost $860,000 according to their job cost sheets.

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


Raw Materials	$	36,000
Work in Process	$	27,000
Finished Goods	$	66,000

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 for the year.

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Accounts Receivable Sales Beo Bal Beg Bal End. Bal End. Bal. Raw Materials Cost of Goods Sold Beg Bal End. Bal Work in Process Manufacturing Overhead Beg Bal End Bal Finished Goods Advertising Expense End. Bal. Accumulated Depreciation Utilities Expense Bea Bal Beg Bal End Bal. Accounts Payable Salaries Expense Beg Bali Beg. Bal. End. Bal. Depreciation Expense Salaries & Wages Payable Beg Bal Beg Bal End Bal. End Bal Rent Expense Beg Bal End Sal