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 $ $17,900$

Work in process $ $11,900$

Finished goods $ $33,800$

The company applies overhead cost to jobs on the basis of machine$-$hours. For the current year, the company estimated that it would work $36,000$ machine$-$hours and incur $$159,840$ in manufacturing overhead cost. The following transactions were recorded for the year:

Raw materials were purchased on account: $$209,500.$

Raw materials were requisitioned for use in production: $$199,500(80\%$ direct and $20\%$ indirect$).$

The following costs were incurred for employee services:

Direct labour $ $169,500$

Indirect labour $ $28,900$

Sales commissions $ $37,900$

Administrative salaries $ $83,800$

Heat, power, and water costs were incurred in the factory: $$43,900.$

Prepaid insurance expired during the year: $$11,900(90\%$ relates to factory operations, and $10\%$ relates to selling and administrative activities$).$

Advertising costs were incurred, $$51,900.$

Depreciation was recorded for the year: $$61,900(85\%$ relates to factory operations, and $15\%$ relates to selling and administrative activities$).$

Manufacturing overhead cost was applied to production. The company recorded $40,000$ machine$-$hours for the year.

Goods that cost $$502,800$ to manufacture according to their job cost sheets were transferred to the finished goods warehouse.

Sales for the year totalled $$766,500$ and were all on account. The total cost to manufacture these goods according to their job cost sheets was $$494,000.$

Required:

$1.$ journal entries to record the transactions given above.

$2.$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.

$3\mathrm{.}3-$a$.$ Is manufacturing overhead underapplied or overapplied for the year?

multiple choice

Overapplied overhead

Underapplied overhead

$3-$b$.$ Prepare a journal entry to properly dispose of any balance in the Manufacturing Overhead account.

$4.$ an income statement for the year