How to solve

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 $$357,000$ of manufacturing overhead for an estimated allocation base of $1,020$ direct

labor$-$hours. The following transactions occurred during the year:

a$.$ Raw materials purchased on account, $$260,000.$

b$.$ Raw materials used in production $($all direct materials$),$ $$245,000.$

c$.$ Utility bills incurred on account, related to factory operations, and the remainder related to selling and administrative

activities$).$

d$.$ Accrued salary and wage costs:

Direct labor $(1,095$ hours$)$

Indirect labor

selling and administrative salaries

e$.$ Maintenance costs incurred on account in the factory, $$66,000$

f$.$ Advertising costs incurred on account, $$148,000.$

g$.$ Depreciation recorded for the year, $$84,000(75\%$ related to factory equipment, and the remainder related to selling and

administrative equipment$).$

h$.$ Rental cost incurred on account, related to factory facilities, and the remainder related to selling and administrative

facilities$).$

i$.$ Manufacturing overhead cost applied to jobs, $

$?$

j$.$ Cost of goods manufactured, $$890,000.$

k$.$ Sales for the year $($all on account$)$ totaled $$1,800,000.$ These goods cost $$920,000$ according to their job cost sheets.

The beginning balances in the inventory accounts were:

Required:

Prepare journal entries to record the preceding transactions.

Post your entries to T$-$accounts. $($Don$\text{'}$t forget to enter the beginning inventory balances above.$)$

Prepare a schedule of cost of goods manufactured.

$4$A$.$ Prepare a journal entry to close any balance in the Manufacturing Overhead account to Cost of Goods Sold.

$4$B$.$ Prepare a schedule of cost of goods sold.

Prepare an income statement.

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 $$357,000$ of manufacturing overhead for an estimated allocation base of $1,020$ direct

labor$-$hours, The following transactions occurred during the year:

a$.$ Raw materials purchased on account, $$260,000.$

b$.$ Raw materials used in production $($all direct materials$),$ $$245,000.$

c$.$ Utility bills incurred on account, related to factory operations, and the remainder related to selling and administrative $.$

activities$).$

d$.$ Accrued salary and wage costs:

e$.$ Maintenance costs incurred on account in the factory, $$66,000$

f$.$ Advertising costs incurred on account, $$148,000$

g$.$ Depreciation recorded for the year, $$84,000(75\%$ related to factory equipment, and the remainder related to selling and

administrative equipment$).$

h$.$ Rental cost incurred on account, related to factory facilities, and the remainder related to selling and administrative

facilities$).$

i$.$ Manufacturing overhead cost applied to jobs, $

j$.$ Cost of goods manufactured, $$890,000.$

k$.$ Sales for the year $($all on account$)$ totaled $$1,800,000.$ These goods cost $$920,000$ according to their job cost sheets.

The beginning balances in the inventory accounts were:

Required:

Prepare journal entries to record the preceding transactions.

$2$ Post your entries to T$-$accounts. $($Don$\text{'}$t forget to enter the beginning inventory balances above.$)$

Prepare a schedule of cost of goods manufactured.

$4$A$.$ Prepare a journal entry to close any balance in the Manufacturing Overhead account to Cost of Goods Sold.

$4$B$.$ Prepare a schedule of cost of goods sold.

Prepare an income statement.