Problem $3-15($Algo$)$ Journal Entries; T$-$Accounts; Financial Statements $[$LO$3-1,$ LO$3-2,$ LO$3-3,$ LO$3-4]$

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 that 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 $$370,500$ of manufacturing overhead for an estimated allocation base of $950$ direct labor$-$hours. The following transactions took place during the year:

Raw materials purchased on account, $$270,000.$

Raw materials used in production $($all direct materials$),$ $$255,000.$

Utility bills incurred on account, $$73,000(90\%$ related to factory operations, and the remainder related to selling and administrative activities$).$

Accrued salary and wage costs:

Direct labor $(1,030$ hours$)$ $ $300,000$

Indirect labor $ $104,000$

Selling and administrative salaries

$ $180,000$

Maintenance costs incurred on account in the factory, $$68,000$

Advertising costs incurred on account, $$150,000.$

Depreciation was recorded for the year, $$86,000(75\%$ related to factory equipment, and the remainder related to selling and administrative equipment$).$

Rental cost incurred on account, $$111,000(80\%$ related to factory facilities, and the remainder related to selling and administrative facilities$).$

Manufacturing overhead cost was applied to jobs, $$?.$

Cost of goods manufactured for the year, $$910,000.$

Sales for the year $($all on account$)$ totaled $$1,900,000.$ These goods cost $$940,000$ according to their job cost sheets.

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

Raw Materials $ $44,000$

Work in Process $ $35,000$

Finished Goods $ $74,000$

Required:

$1.$ Prepare journal entries to record the preceding transactions.

$2.$ Post your entries to T$-$accounts. $($Don$$t forget to enter the beginning inventory balances above.$)$

$3.$ Prepare a schedule of cost of goods manufactured.

$4$A$.$ Prepare a journal entry to close any balance in the Manufacturing Overhead account to Cost of Goods Sold.

$4$B$.$ Prepare a schedule of cost of goods sold.

$5.$ Prepare an income statement for the year.