New Junior Company is a manufacturing firm that uses Job-Order costing system. On January 1, the beginning of the current year, the companys inventory balances were as follows:

Raw materials $13700 Work in process 44000 Finished goods 32400

The company applies cost to jobs on the basis of machine hours. For the current year, the company estimated that it would work 32500 machine hours and incur $151000 in manufacturing overhead costs. The following transactions were recorded for the year: a. Raw Materials purchased on account, $213500. b. Raw materials requisitioned for use in production, $187000 (70% direct and 30% indirect). c. The following costs were incurred for employee services: Direct Labor $155000 Indirect Labor 34000 Sales commissions 29000 Administrative salaries 76600 d. Heat, power, and water costs incurred in the factory, $37000. e. Prepaid insurance expired during the year, $10000 (80% relates to factory operations, and 20% relates to selling and administrative activities). f. Advertising costs incurred, $43000. g. Depreciation recorded for the year, $70000 (80% relates to factory operations, and 20% relates to selling and administrative activities). h. Manufacturing overhead cost was applied to production. The company recorded 37800 machine-hours for the year. i. Goods costing $500000 to manufacture were completed during the year. j. Goods were sold on account to customers during the year at a total selling price of $850000. These goods cost $487000 to manufacture. Required: 1. Prepare journal entries to record the transactions given above. 2. Prepare T-accounts for inventories, Manufacturing Overhead, and Cost of Goods Sold. Post relevant data from your journal entries to these T-accounts (dont forget to enter the opening balances). Compute an ending balance in each account. 3. Is Manufacturing Overhead underapplied or overapplied for the year? 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.