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 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 $$153,000$ in manufacturing overhead cost. The following transactions were recorded for the year:

Raw materials were purchased on account: $$200,000.$

Raw materials were requisitioned for use in production: $$190,000(80\%$ direct and $20\%$ indirect$).$

The following costs were incurred for employee services:

Direct labour $ $160,000$

Indirect labour $ $27,000$

Sales commissions $ $36,000$

Administrative salaries $ $80,000$

Heat, power, and water costs were incurred in the factory: $$42,000.$

Prepaid insurance expired during the year: $$10,000(90\%$ relates to factory operations, and $10\%$ relates to selling and administrative activities$).$

Advertising costs were incurred, $$50,000.$

Depreciation was recorded for the year: $$60,000(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 $$480,000$ to manufacture according to their job cost sheets were transferred to the finished goods warehouse.

Sales for the year totalled $$700,000$ and were all on account. The total cost to manufacture these goods according to their job cost sheets was $$475,000.$

Required:

$1.$ Prepare journal entries to record the transactions given above. $($Do not round intermediate calculations. If no entry is required for a transaction$/$event$,$ select $"$No journal entry required" in the first account field.$)$

$2.$ 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.

$3-$a$.$ Is manufacturing overhead underapplied or overapplied for the year?

multiple choice

Underapplied overhead

Overapplied overhead

$3-$b$.$ Prepare a journal entry to properly dispose of any balance in the Manufacturing Overhead account. $($Round your percentages and final answers to $2$ decimal places. If no entry is required for a transaction$/$event$,$ select $"$No journal entry required" in the first account field.$)$

$4.$ Prepare an income statement for the year. $($Do not round intermediate calculations and round your final answers to the nearest hundreds.$)$