Froya Fabrikker A/S of Bergen, Norway, is a small company that manufactures specialty heavy equip... 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. Post your entries to T-accounts. (Dont forget to enter the beginning inventory balances above.) 2. Prepare a schedule of cost of goods manufactured. 3. Prepare a journal entry to close any balance in the Manufacturing Overhead account to Cost of Goods Sold. 4. Prepare a schedule of cost of goods sold. 5. Prepare an income statement for the year.

No	Transaction	General Journal	Debit	Credit
1	a.	Raw materials	230,000
		Accounts payable		230,000
		No journal entry required
2	b.	Work in process	215,000
		Raw materials		215,000
3	c.	Manufacturing overhead	55,250
		Salaries expense	9,750
		Accounts payable		65,000
4	d.	Work in process	260,000
		Manufacturing overhead	96,000
		Salaries expense	140,000
		Salaries and wages payable		496,000
5	e.	Manufacturing overhead	60,000
		Accounts payable		60,000
6	f.	Advertising expense	142,000
		Accounts payable		142,000
7	g.	Manufacturing overhead	67,500
		Depreciation expense	22,500
		Accumulated depreciation		90,000
8	h.	Manufacturing overhead	92,000
		Rent expense	23,000
		Accounts payable		115,000
9	i.	Work in process	374,550
		Manufacturing overhead		374,550
10	j.	Finished goods	830,000
		Work in process		830,000
11	k(1).	Accounts receivable	1,500,000
		Sales		1,500,000
12	k(2).	Cost of goods sold	860,000
		Finished goods		860,000