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 $395,600 of manufacturing overhead for an estimated allocation base of 920 direct labor-hours. The following transactions occurred during the year:

• Raw materials purchased on account, $290,000.
• Raw materials used in production (all direct materials), $275,000.
• Utility bills incurred on account, $77,000 (90% related to factory operations, and the remainder related to selling and administrative activities).
• Accrued salary and wage costs:

e Direct labor (970 hours)	f $ 320,000
g Indirect labor	h $ 108,000
i Selling and administrative salaries	j $ 200,000

• k Maintenance costs incurred on account in the factory, $72,000
• Advertising costs incurred on account, $154,000.
• Depreciation 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 applied to jobs, $?question mark .
• Cost of goods manufactured, $950,000.
• Sales for the year (all on account) totaled $2,100,000. These goods cost $980,000 according to their job cost sheets.

The beginning balances in the inventory accounts were:

Raw Materials	$ 48,000
Work in Process	$ 39,000
Finished Goods	$ 78,000

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.