Problem 3 15 (Algo) Journal Entries T Accounts Financial Statements LO3 1, LO3 2, LO3 3, LO3 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 $350,000 of manufacturing overhead for an estimated allocation base of 1,000 direct labor hours The following transactions took place during the year Raw materials purchased on account, $250,000 Raw materials used in production (all direct materials), $235,000 Utility bills incurred on account, $69,000 (90 related to factory operations, and the remainder related to selling and administrative activities) Accrued salary and wage costs Direct labor (1,075 hours)$ 280,000Indirect labor$ 100,000Selling and administrative salaries$ 160,000 Maintenance costs incurred on account in the factory, $64,000 Advertising costs incurred on account, $146,000 Depreciation was recorded for the year, $82,000 (75 related to factory equipment, and the remainder related to selling and administrative equipment) Rental cost incurred on account, $107,000 (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, $870,000 Sales for the year (all on account) totaled $1,700,000 These goods cost $900,000 according to their job cost sheets The balances in the inventory accounts at the beginning of the year were Raw Materials$ 40,000Work in Process$ 31,000Finished Goods$ 70,000 Required 1 Prepare journal entries to record the preceding transactions 2 Post your entries to T accounts (Dont forget to enter the beginning inventory balances above ) 3 Prepare a schedule of cost of goods manufactured 4A Prepare a journal entry to close any balance in the Manufacturing Overhead account to Cost of Goods Sold 4B Prepare a schedule of cost of goods sold 5 Prepare an income statement for the year

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Problem 3-15 (Algo) Journal Entries; T-Accounts; Financial Statements [LO3-1, LO3-2, LO3-3, LO3-4] Froya Fabrikker A/S of Bergen, Norway, is a small company that manufactures specialty

Problem 3-15 (Algo) Journal Entries; T-Accounts; Financial Statements [LO3-1, LO3-2, LO3-3, LO3-4]

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 $350,000 of manufacturing overhead for an estimated allocation base of 1,000 direct labor-hours. The following transactions took place during the year:

Raw materials purchased on account, $250,000.
Raw materials used in production (all direct materials), $235,000.
Utility bills incurred on account, $69,000 (90% related to factory operations, and the remainder related to selling and administrative activities).
Accrued salary and wage costs:

Direct labor (1,075 hours)$ 280,000Indirect labor$ 100,000Selling and administrative salaries$ 160,000

Maintenance costs incurred on account in the factory, $64,000
Advertising costs incurred on account, $146,000.
Depreciation was recorded for the year, $82,000 (75% related to factory equipment, and the remainder related to selling and administrative equipment).
Rental cost incurred on account, $107,000 (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, $870,000.
Sales for the year (all on account) totaled $1,700,000. These goods cost $900,000 according to their job cost sheets.

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

Raw Materials$ 40,000Work in Process$ 31,000Finished Goods$ 70,000

Required:

1. Prepare journal entries to record the preceding transactions.

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

3. Prepare a schedule of cost of goods manufactured.

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

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

5. Prepare an income statement for the year.