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 $94,500 of manufacturing overhead for an estimated activity level of $45,000 direct labor dollars. At the beginning of the year, the inventory balances were as follows: Raw materials Work in process Finished goods $ 10,600 $ 5,000 $ 8,300 During the year, the following transactions were completed: a. Raw materials purchased on account, $ 166,000. b. Raw materials used in production, $149,000 (materials costing $125,000 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 $ 159,000 $ 245,400 $ 30,000 $ 45,000 d. Rent for the year was $18,100 ($13,900 of this amount related to factory operations, and the remainder related to selling and administrative activities). e. Utility costs incurred in the factory, $20,000. f. Advertising costs incurred, $14,000. g. Depreciation recorded on equipment, $22,000. ($17,000 of this amount related to equipment used in factory operations; the remaining $5,000 related to equipment used in selling and administrative activities.) h. Record the manufacturing overhead cost 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 $519,000. The total cost to manufacture these goods according to their job cost sheets was $218,000. No Transaction General Journal Debit Credit 1 a. 166,000 Raw materials Cash 166,000 2 b. Work in process Manufacturing overhead Raw materials 125,000 24,000 149,000 3 C. Work in process Manufacturing overhead Sales commisions expense Salaries and wages payable Cash 159,000 245,400 30,000 45,000 479,400 4 d. Manufacturing overhead Rent expense Cash 13,900 4,200 18,100 5 e. 20,000 Manufacturing overhead Cash 20,000 6 6 f. 14.000 Advertising expense Cash 14,000 7 g. g Manufacturing overhead Depreciation expense Accumulated depreciation 17,000 5,000 22,000 8 h. 262,500 Work in process Manufacturing overhead 262,500 9 i. 226,000 Finished goods Work in process 226,000 10 j(1). 519,000 Cash Sales 519,000 11 j(2) 218,000 Cost of goods sold Finished goods 218,000 Raw Materials Work in Process Beg. Bal. Beg. Bal. End. Bal. End. Bal. Finished Goods Manufacturing Overhead Beg. Bal. Beg. Bal. End. Bal. Cost of Goods Sold End. Bal. Beg. Bal. End. Bal. Prepare an income statement for the year. (All of the information needed for the income statement is available in the jour entries and T-accounts you have prepared.) 0 Gold Nest Company Income Statement For the Year Ended Sales Cost of goods sold Gross margin Selling and administrative expenses Sales commissions Administrative salaries expense Rent expense Advertising expense Depreciation expense 0 Net operating income $ $ 0