PROBLEM 5-18 Journal Entries; T-Accounts; Cost Flows [LO4 , LOC.L0721 Ravsten Company uses a job-order costing system. On January 1, the beginning of the current year, the company's inventory balances were as follows: Raw Materials $16,000 Work in Process $10,000 Finished Goods $30,000 The company applics overhead cost to jobs on the basis of machine-bours. For the current year, the company estimated that it would work 36.000 machine-hours and incur $153,000 in manufacturing overhead cost. The following transactions were recorded for the year 4. Raw materials were purchased on account: $200,000. b. Raw materials were requisitioned for use in production: $190.000 (80% direct and 20% indirect). c. The following costs were incurred for employee services: Page 179 Direct labour $160,000 Indirect labour $ 27,000 Sales commissions $ 36,000 Administrative salaries $ 80.000 d. Heat, power, and water costs were incurred in the factory: 542,000 2. Prepaid insurance expired during the year: 510,000 (90% relates to factory operations, and 10% relates to selling and administrative activities) f. Advertising costs were incurred, $50,000 2. Depreciation was recorded for the year: 560,000 (85% relates to factory operations, and 15% relates to selling and administrative activities). h. Manufacturing overhead cost was applied to production. The company Eccorded 40.000 machine-hours for the year. i. Goods that cost $480,000 to manufacture according to their job cost shects were transferred to the finished goods warchouse. J. Sales for the year totalled $700.000 and were all on account. The total cost to manufacture these goods according to their job cost shects was $475,000. Required: 1. Preparc journal entries to record the transactions given above. 2. Prepare T-accounts for inventories, Manufacturing Overhead, and Cost of Goods Sold. Post relevant data from your journal entries to these T-accounts (don't forget to enter the opening balances in your inventory accounts). Compute an ending balance in each account 3. I: Manufacturing Overhead underapplied or overapplied for the year? Prepare a journal entry to properly dispose of any balance in the Manufacturing Overhead account. 4. Prepare an income statement for the year. (Do not prepare a schedule of cost of goods manufactured, all of the information needed for the income statement is available in the journal entries and T-accounts you have prepared.)