P3-14 Entries Directly Into T-Accounts; Income Statement Hudson Company's trial balance as of January 1, the beginning of the fiscal year, is given below Accounts Receivable Finished Goods . .. . Plant and Equipment 18,000 9,000 20,000 32,000 4,000 210,000 -Prepaid Insurance Aceulated Depreciation 53,000 38,000 160,000 9,000 -Capital Stock Retained Earnings . Total $300.000 $300.000 Hudson Company is a manufacturing firm and employs a job-order costing system. During the year, the fllowing transactions took place: a. Raw materials purchased on account, $40,000. b. Raw materials were requisitioned for use in production, $38,000 (85% direct and 15% Factory utility costs incurred, $19,100. Depreciation was recorded on plant and equipment, $36,000. Three-fourths of the depreciation related to factory equipment, and the remainder related to selling and administrative equipment. Advertising cxpense incurred, $48,000. Costs for salaries and wages were incurred as follows: c. d. e. f. Indirect labor Administrative salaries 10,000 30,000 Prepaid insurance expired during the year, $3,000 (80% related to factory operations, and 20% related to selling and administrative activities). Miscellaneous selling and administrative expenses incurred, S9,500. Manufacturing overhead was applied to production. The company applies overhead on the basis of $8 per machine-hour; 7,500 machine-hours were recorded for the year. Goods that cost S140,000 to manufacture according to their job cost sheets were transferred to the finished goods warehouse. Sales for the year totaled $250,000 and were all on account. The total cost to manufacture these goods according to their job cost shcets was $130,000. Collections from customers during the year totaled $245,000. Payments to suppliers on account during the year, $150,000; payments to employees for salaries and wages, $84,000 g. h. i. j. k. 1 m. Required 1. Prepare a T account for each account in the company's trial balance and enter the opening balances shown above 2. Record the transactions above directly into the T-accounts. Prepare new T-accounts as needed. Key your entries to the letters (a) through (m) above. Find the ending balance in each account Is manufacturing overbead underapplied or overapplied for the year? Make an entry in the T-accounts to close any balance in the Manufacturing Overhead account to Cost of Goods Sold. 3. 4. Proparc an income statement for the year. (Do not prepare a schedule of cost of goods raanufactured; alof the information needed for the income statement is available in thc T-aocounts.) 132 Part I: The Foundation Cost Terms, Systems Design, and Cost Behavior Molding Painting 62,000 9,000 $430,000 $680,000 436,000 Manufacturing overhead cost .<.570 direct labor-hours materials cost what was the amount of under- or overapplied overhead in each department at end year>