Ravsten Company uses a job-order costing system. On January 1, the beginning of the current year, le company's inventory balances were as follows: Raw Materials ........................ Work in Process ........... Finished Goods .. $16,000 $10,000 $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. a Raw materials were purchased on account: $200,000. b. 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 d. Heat, power, and water costs were incurred in the factory: $42,000. e 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. i 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. 2. Prepare T-accounts for inventories, Manufacturing Overhead, and Cost of Goods Sold. Post rele- vant 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. Is Manufacturing Overhead underapplied or overapplied for the year? Prepare a journal entry to properly dispose of any balance in the Manufacturing Overhead account. Prepare an income statement for the year. (Do not prepare a schedule of cost of goods manufac- tured; all of the information needed for the income statement is available in the journal entries and T-accounts you have prepared.) Ravsten Company uses a job-order costing system. On January 1, the beginning of the current year, le company's inventory balances were as follows: Raw Materials ........................ Work in Process ........... Finished Goods .. $16,000 $10,000 $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. a Raw materials were purchased on account: $200,000. b. 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 d. Heat, power, and water costs were incurred in the factory: $42,000. e 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. i 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. 2. Prepare T-accounts for inventories, Manufacturing Overhead, and Cost of Goods Sold. Post rele- vant 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. Is Manufacturing Overhead underapplied or overapplied for the year? Prepare a journal entry to properly dispose of any balance in the Manufacturing Overhead account. Prepare an income statement for the year. (Do not prepare a schedule of cost of goods manufac- tured; all of the information needed for the income statement is available in the journal entries and T-accounts you have prepared.)