Note that Top applies overhead cost to jobs on the basis of labour-hours worked. For the current year, the company estimated that it would work 9,000 labour-hours and incur 390,000 in manufacturing overhead cost.

The following transactions were recorded for the year:

1. $550,000 worth of Raw Materials were purchased on account.
2. $350,000 worth of Raw Materials were requisitioned for use in production, $300,000 relate to direct materials and $50,000 indirect materials
3. The cost for payroll include: direct labour, $200,000, Indirect labour, $70,000 & Administrative $120,000
4. Production building utility costs, $37,000
5. Depreciation was recorded for the year, $200.000 ($75% relates to factory operations, and 25% relates to administrative activities)
6. Prepaid insurance of $17,000 expired during the year (65% relates to production building operations, and the remaining 35% relates to administrative activities)
7. Predetermined Overhead Rate: as noted earlier it is applied to production. Note lower than expected demand was found, the company worked 7,500 labour-hours during the year.
8. Goods costing $700,000 to manufacture were completed during the year.
9. $1,100,000 worth of goods were sold on account. The goods cost $590,000 to manufacture

Required:

1. Prepare journal entries to record the transactions that have been listed above
2. Post the entries in requirement (1.) to T-accounts (do not forget to enter the opening balances in the inventory accounts)
3. Prepare the journal entry necessary to close any balance in the manufacturing overhead account to cost of goods sold.
4. Prepare an income statement for the year

Note that Top applies overhead cost to jobs on the basis of labour-hours worked. For the current year, the company estimated that it would work 9,000 labour-hours and incur $390,000 in manufacturing overhead cost. The following transactions were recorded for the year: a. $550,000 worth of Raw Materials were purchased on account. b. $350,000 worth of Raw Materials were requisitioned for use in production, $300,000 relate to direct materials and $50,000 indirect materials c. The cost for payroll include: direct labour, $200,000, Indirect labour, $70,000 \& Administrative $120,000 d. Production building utility costs, $37,000 e. Depreciation was recorded for the year, $200.000 ( $75% relates to factory operations, and 25% relates to administrative activities) f. Prepaid insurance of $17,000 expired during the year (65% relates to production building operations, and the remaining 35% relates to administrative activities) g. Predetermined Overhead Rate: as noted earlier it is applied to production. Note lower than expected demand was found, the company worked 7,500 labour-hours during the year. h. Goods costing $700,000 to manufacture were completed during the year. i. $1,100,000 worth of goods were sold on account. The goods cost $590,000 to manufacture Required: 1. Prepare journal entries to record the transactions that have been listed above 2. Post the entries in requirement (1.) to T-accounts (do not forget to enter the opening balances in the inventory accounts) 3. Prepare the journal entry necessary to close any balance in the manufacturing overhead account to cost of goods sold. 4. Prepare an income statement for the year