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 Raw materials purchased on account, $245,000 Raw materials used in production (all direct materials), $230,000 Utility bills incurred on account, $68,000 (85 related to factory operations, and the remainder related to selling and administrative activities) Accrued salary and wage costs Direct labor (1,125 hours)$ 275,000Indirect labor$ 99,000Selling and administrative salaries$ 155,000 Maintenance costs incurred on account in the factory, $63,000 Advertising costs incurred on account, $145,000 Depreciation recorded for the year, $81,000 (70 related to factory equipment, and the remainder related to selling and administrative equipment) Rental cost incurred on account, $106,000 (75 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, $860,000 Sales for the year (all on account) totaled $1,650,000 These goods cost $890,000 according to their job cost sheets The beginning balances in the inventory accounts were Raw Materials$ 39,000Work in Process$ 30,000Finished Goods$ 69,000 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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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

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:

Raw materials purchased on account, $245,000.
Raw materials used in production (all direct materials), $230,000.
Utility bills incurred on account, $68,000 (85% related to factory operations, and the remainder related to selling and administrative activities).
Accrued salary and wage costs:

Direct labor (1,125 hours)$ 275,000Indirect labor$ 99,000Selling and administrative salaries$ 155,000

Maintenance costs incurred on account in the factory, $63,000
Advertising costs incurred on account, $145,000.
Depreciation recorded for the year, $81,000 (70% related to factory equipment, and the remainder related to selling and administrative equipment).
Rental cost incurred on account, $106,000 (75% 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, $860,000.
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:

Raw Materials$ 39,000Work in Process$ 30,000Finished Goods$ 69,000

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.