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 $370,500 of manufacturing overhead for an estimated allocation base of 950 direct labor-hours. The following transactions took place during the year: a. Raw materials purchased on account, $270,000. b. Raw materials used in production (all direct materials), $255,000. c. Utility bills incurred on account, $73,000 (90% related to factory operations, and the remainder related to selling and administrative activities). d. Accrued salary and wage costs: Direct labor (1,030 hours) Indirect labor Selling and administrative salaries $ 300,000 $ 104,000 $ 180,000 e. Maintenance costs incurred on account in the factory, $68,000 f. Advertising costs incurred on account, $150,000. g. Depreciation was recorded for the year, $86,000 (75% related to factory equipment, and the remainder related to selling and administrative equipment). h. Rental cost incurred on account, $111,000 (80% related to factory facilities, 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, $910,000. k. 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 Work in Process Finished Goods Required: $ 44,000 $ 35,000 $ 74,000 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. 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.