Problem 2-26A Journal Entries; T-Accounts; Financial Statements [LO2-1, LO2-2, LO2-3, LO2-4, LO2-5, LO2-6, LO2-7]

Froya Fabrikker A/S of Bergen, Norway, is a small company that manufactures specialty heavy equipment for use in North Sea oil fields. The company uses a job-order costing system and applies manufacturing overhead cost to jobs on the basis of direct labor-hours. Its predetermined overhead rate was based on a cost formula that estimated $395,600 of manufacturing overhead for an estimated allocation base of 920 direct labor-hours. The following transactions took place during the year (all purchases and services were acquired on account):

a.	Raw materials purchased for use in production, $290,000.
b.	Raw materials requisitioned for use in production (all direct materials), $275,000.
c.	Utility bills were incurred, $77,000 (90% related to factory operations, and the remainder related to selling and administrative activities).
d.	Salary and wage costs were incurred:

Direct labor (970 hours)	$	320,000
Indirect labor	$	108,000
Selling and administrative salaries	$	200,000

e.	Maintenance costs were incurred in the factory, $72,000.
f.	Advertising costs were incurred, $154,000.
g.	Depreciation was recorded for the year, $90,000 (75% related to factory equipment, and the remainder related to selling and administrative equipment).
h.	Rental cost incurred on buildings, $115,000 (80% related to factory operations, and the remainder related to selling and administrative facilities).
i.	Manufacturing overhead cost was applied to jobs, $ ?.
j.	Cost of goods manufactured for the year, $950,000.
k.	Sales for the year (all on account) totaled $2,100,000. These goods cost $980,000 according to their job cost sheets.

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

Raw materials	$	48,000
Work in process	$	39,000
Finished Goods	$	78,000

2.Post your entries to T-accounts. (Don't forget to enter the opening inventory balances below.) Determine the ending balances in the inventory accounts and in the Manufacturing Overhead account. Accounts Receivable Sales End. Bal. End. Bal. Cost of Goods Sold Beg. Bal. a. Raw Materials 48.000 290,000 275,000 b. End. Bal. End. Bal. 63,000 Beg. Bal. b. d. Work in Process 39,000 275,000 950,000 1. 320,000 417,100 c. d. e. Manufacturing Overhead 69,300 417,100 1. 108,000 72,000 67,500 92,000 1. g. in. End. Bal. 101,100 End. Bal. 8,300 Advertising Expense Beg. Bal. 1. Finished Goods 78,000 950,000 980,000 ik. End. Bal. End. Bal. 48,000 Accumulated Depreciation Utilities Expense End. Bal. End. Bal. Accounts Payable Salaries Expense End. Bal. End. Bal. Depreciation Expense Salaries & Wages Payable End. Bal. End. Bal. Rent Expense End. Bal