Popcorn Company is a manufacturer that uses job-order costing. On January 1, the companys inventory balances were as follows:

Raw Materials $20,000 Work in Process $15,000 Finished Goods $30,000

The Company applies overhead costs to jobs on the basis of machine-hours worked. For the current year, the companys predetermined overhead rate was based on a cost formula that estimated $450,000 of total manufacturing overhead for an estimated activity level of 75,000 machine hours. The following transactions occurred over the year:

a. Raw materials were purchased on account for $410,000 b. Raw materials used in production were $380,000 ($360,000 direct materials, $20,000 indirect materials) c. The following costs were accrued for employee services: $75,000 in direct labor, $110,000 in indirect labor, $90,000 in sales commissions and $200,000 in administrative salaries d. Sales travel costs on account were $17,000 e. Utility costs on account for the factory were $43,000 f. Advertising costs on account were $180,000 g. Depreciation for the year was $350,000; 80% related to factory assets and 20% related to selling and administrative assets h. Insurance expired during the year for $10,000; 70% related to factory operations and 30% related to selling and administrative activities i. Manufacturing overhead was applied to production; due to greater than expected demand for its products, the company worked 80,000 machine hours on all jobs during the year j. Jobs costing $900,000 to manufacture (according to their job cost sheets) were completed during the year k. Jobs were sold on account to customers during the year for a total of $1,500,000. The jobs cost $870,000 to manufacture according to their job cost sheets Case requirements: 1. Prepare the journal entries to record the transactions above 2. Create T accounts for the company to represent its ledger and post the transactions to the T accounts (dont forget the beginning balances in inventory, above) 3. After you post, decide if manufacturing overhead is overapplied or underapplied for the year. Assuming the amount is immaterial, create the journal entry to correct at the end of the year 4. Prepare a multi-step income statement for the year