Oil fiels equipment company is a small company that manufactures specialty heavy equipment for use in Alberta oil-fields. The company uses a jon-order costing system and applies manufacturing overhead cost to jobs on the basis of the direct labour hours. At the beginning of the current year, the following estimates were made to compute the predetermined overhead rate: manufacturing overhead cost, $360,000, and 900 direct labour hours. The following transactions took place during the year (all purchases and services were acquired on account):

a. Raw materials were purchased for use in production: $200,000

b. Raw materials were requisitioned for use in production (all direct materials): $185,000

c. Utility bills were incurred in the factory: $70,000 (90% related to factory operations and the remaining related to administrative activities).

d. Cost for salaries and wages were incurred as follows:

Direct labour (975 hours) $230,000

Indirect labour $90,000

Selling and administrative salaries $110,000

e. Maintenance costs incurred in the factory: $54,000

f. Advertising costs incurred: $136,000

g. Depreciation was recorded for the year: $95,000 (80% relates to factory assets, and the remainder is related to selling and administration facilities).

h. rental cost was incurred on buildings: $120,000 (85% of the space is occupied by the factory, and the remainder is related to selling and administration facilities).

i. Manufacturing overhead cost was applied to jobs: $?

j. Costs of goods manufactured for the year was $770,000.

k. Sales for the year (all on account) totalled $1,200,000. These goods cost $800,000 according to their job cost sheets.

The balances in the inventory accounts at the beginning of the year were as follows:

Raw Materials $30,000

Work in Process $21,000

Finished Goods $60,000

Required:

1. Prepare journal entries to record the above data.
2. Post your entries to T-accounts ( Don't forget to enter the opening inventory balances above) Determine the ending balances in the inventory accounts and in the manufacturing overhead account.
3. Submit a schedule of cost of goods manufactured.
4. Submit journal entries to properly dispose of any balance in the Manufacturing overhead account. Submit a schedule of cost of goods sold.
5. Submit an income statement for the year.