PROBLEM 3-15 Journal Entries; T-Accounts; Financial Statements L03-1, LO3-2, LO3-3, L03-4 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 $360,000 of manufacturing overhead tor an estimated allocation base of 900 direct labor-hours. The following transactions took place during the year: a) Raw materials purchased on account, $200,000. b) Raw materials used in production (all direct materials), $185,000. C) Utility bills incurred on account, $70,000 (90% related to factory operations, and the remainder related to selling and administrative activities). d) Accrued salary and wage costs: Direct labor (975 hours). Indirect labor Selling and administrative salaries $230,000 $90,000 $110,000 E) Maintenance costs incurred on account in the factory, $54,000. F) Advertising costs incurred on account, $136,000. G) Depreciation was recorded for the year, $95,000 (80% related to factory equipment, and the remainder related to selling and administrative equipment). H) Rental cost incurred on account, $120,000 (85% 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, $770,000. K) Sales for the year (all on account) totaled $1,200,000. These goods cost $800,000 according to their job cost sheets. The balances in the inventory accounts at the beginning of the year were: Raw Materials-$30,000 Work in Process-$21,000 Finished Goods-$60,000 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 balance: above.) Determine the ending balances in the inventory accounts and in the Manufacturing Overhead account. 3. Prepare a schedule of cost of goods manufactured. 4.

Prepare a journal entry to close any balance in the Manufacturing Overhead account t 5.

Cost of Goods Sold. Prepare a schedule of cost of goods sold. Prepare an income statement for the year.

ONLY DO THE REQUIRED (2ND PART)