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 Work in Process Finished Goods 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). c. The following costs were incurred for employee services: 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). f. Advertising costs were incurred, $50,000. g. Depreciation was recorded for the year: $60,000 ( 85% relates to factory operations, and 15% relates to selling and administrative activities). h. Manufacturing overhead cost was applied to production. The company recorded 40,000 machine-hours for the year. i. Goods that cost $480,000 to manufacture according to their job cost sheets were transferred to the finished goods warehouse. 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 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 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. Is 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.)