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 $351,500 of manufacturing overhead for an estimated allocation base of 950 direct labor-hours. The following transactions took place during the year:

1. Raw materials purchased on account, $215,000.
2. Raw materials used in production (all direct materials), $200,000.
3. Utility bills incurred on account, $62,000 (85% related to factory operations, and the remainder related to selling and administrative activities).
4. Accrued salary and wage costs:

Direct labor (1,025 hours)	$ 245,000
Indirect labor	$ 93,000
Selling and administrative salaries	$ 125,000

1. Maintenance costs incurred on account in the factory, $57,000
2. Advertising costs incurred on account, $139,000.
3. Depreciation was recorded for the year, $87,000 (80% related to factory equipment, and the remainder related to selling and administrative equipment).
4. Rental cost incurred on account, $112,000 (85% related to factory facilities, and the remainder related to selling and administrative facilities).
5. Manufacturing overhead cost was applied to jobs, $?.
6. Cost of goods manufactured for the year, $800,000.
7. Sales for the year (all on account) totaled $1,350,000. These goods cost $830,000 according to their job cost sheets.

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

Raw Materials	$ 33,000
Work in Process	$ 24,000
Finished Goods	$ 63,000

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.