Gold Nest Company of Guandong, China, is a family-owned enterprise that makes birdcages for the South China market. The company sells its birdcages through an extensive network of street vendors who receive commissions on their sales. The company uses a job-order costing system in which overhead is applied to jobs on the basis of direct labor cost. Its predetermined overhead rate is based on a cost formula that estimated $85,000 of manufacturing overhead for an estimated activity level of $50,000 direct labor dollars. At the beginning of the year, the inventory balances were as follows: Raw materials Work in process Finished goods $10,300 $ 4,500 $ 8,900 During the year, the following transactions were completed: a. Raw materials purchased on account, $169,000. b. Raw materials used in production, $145,000 (materials costing $123,000 were charged directly to jobs; the remaining materials were indirect). c. Costs for employee services were incurred as follows: Direct labor Indirect labor Sales commissions Administrative salaries $ 166,000 $ 200,100 $ 21,000 $ 46,000 d. Rent for the year was $18,700 ($13,400 of this amount related to factory operations, and the remainder related to selling and d. Rent for the year was $18,700 ($13,400 of this amount related to factory operations, and the remainder related to selling and administrative activities). e. Utility costs incurred in the factory, $17,000. f. Advertising costs incurred, $11,000. g. Depreciation recorded on equipment, $22,000. ($16,000 of this amount related to equipment used in factory operations; the remaining $6,000 related to equipment used in selling and administrative activities.) h. Manufacturing overhead cost was applied to jobs, $_? . i. Goods that had cost $226,000 to manufacture according to their job cost sheets were completed. j. Sales for the year (all paid in cash) totaled $505,000. The total cost to manufacture these goods according to their job cost sheets was $216,000. Required: 1. Prepare journal entries to record the transactions for the year. 2. Prepare T-accounts for each inventory account, Manufacturing Overhead, and Cost of Goods Sold. Post relevant data from your journal entries to these T-accounts (don't forget to enter the beginning balances in your inventory accounts). 3A. Is Manufacturing Overhead underapplied or overapplied for the year? 3B. Prepare a journal entry to close any balance in the Manufacturing Overhead account to Cost of Goods Sold. 4. Prepare an income statement for the year. All of the information needed for the income statement is available in the journal entries and T-accounts you have prepared. > Answer is not complete. Complete this question by entering your answers in the tabs below. Reg 1 Req 2 Req 3A Req 3B Req 4 No Transaction General Journal Debit Credit 1 a. 169,000 Raw materials Accounts payable oo 169,000 2 b. Work in process Manufacturing overhead Raw materials 145,000 X 22,000 167,000 3 C. Work in process Manufacturing overhead Sales commisions expense Administrative salaries expense Salaries and wages payable 166,000 200,100 21,000 46,000 433,100 4 d. Manufacturing overhead Administrative salaries expense 13,400 5,300 x Cash X 18.700 5 e. 17,000 Manufacturing overhead Cash x 17,000 6 f. 14,000 X Advertising expense Cash x 14,000 HOME Cash x 17,000 6 f. 14,000 X Advertising expense Cash X 14,000 7 g. 16,000 Manufacturing overhead Administrative salaries expense Depreciation expense x 6,000 x 22,000 8 h. Work in process Manufacturing overhead 9 i. 226,000 Finished goods Work in process lo 226,000 10 j(1). Cash 505,000 Sales 505,000 11 j(2) 700,000 X Cost of goods sold Finished goods 700,000 X Prepare T-accounts for each inventory account, Manufacturing Overhead, and Cost of Goods Sold. Post relevant data from your journal entries to the T-accounts (don't forget to enter the beginning balances in your inventory accounts). (Do not round intermediate calculations.) Beg. Bal. Raw Materials 10,300 169,000 167,000 X b. Beg. Bal. Work in Process 4,500 145,000 X 226,000 166,000 a. b. i. C. h. End. Bal. 12,300 End. Bal. 89,500 Manufacturing Overhead Beg. Bal. Finished Goods 8,900 226,000 700,000 Beg. Bal. b. i. j. h. C. d. 22,000 200,100 13,400 17,000 16,000 End. Bal. 465,100 e. g. Cost of Goods Sold End. Bal. 268,500 Beg. Bal. 700,000 > End. Bal 700,000 Required: 1. Prepare journal entries to record the transactions for the year. 2. Prepare T-accounts for each inventory account, Manufacturing Overhead, and Cost of Goods Sold. Post relevant data from your journal entries to these T-accounts (don't forget to enter the beginning balances in your inventory accounts). 3A. Is Manufacturing Overhead underapplied or overapplied for the year? 38. Prepare a journal entry to close any balance in the Manufacturing Overhead account to Cost of Goods Sold. 4. Prepare an income statement for the year. All of the information needed for the income statement is available in the journal entries and T-accounts you have prepared. > Answer is not complete. Complete this question by entering your answers in the tabs below. Req 1 Reg 2 Req 3A Req 3B Req 4 Prepare a journal entry to close any balance in the Manufacturing Overhead account to Cost of Goods Sold. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) No Transaction General Journal Debit Credit 1 1 7,000 X Manufacturing overhead Cost of goods sold 7,000 X Reg 1 Reg 2 Req 3A Req 3B Reg 4 Prepare an income statement for the year. (All of the information needed for the income statement is available in the journal entries and T-accounts you have prepared.) Gold Nest Company Income Statement For the Year Ended Sales $ 505,000 700,000 X (195,000) Cost of goods sold Gross margin Selling and administrative expenses: Sales commissions Administrative salaries expense Rent expense Advertising expense Depreciation expense 21,000 57,300 X 13,400 X 14,000 > 22,000 X 7,70 $ (322,700) Net operating income