Ravsten Company uses a job order costing system On January 1, the beginning of the current year, the companys inventory balances were as follows Raw materials$18,500 Work in process$11,000 Finished goods$30,500 The company applies overhead cost to jobs on the basis of machine hours For the current year, the company estimated that it would work 36,500 machine hours and incur $164,250 in manufacturing overhead cost The following transactions were recorded for the year Raw materials were purchased on account $210,000 Raw materials were requisitioned for use in production $195,000 (80 direct and 20 indirect) The following costs were incurred for employee services Direct labour$164,000 Indirect labour$28,000 Sales commissions$37,500 Administrative salaries$82,000 Heat, power, and water costs were incurred in the factory $44,250 Prepaid insurance expired during the year $12,500 (85 relates to factory operations, and 15 relates to selling and administrative activities) Advertising costs were incurred, $52,500 Depreciation was recorded for the year $63,000 (90 relates to factory operations, and 10 relates to selling and administrative activities) Manufacturing overhead cost was applied to production The company recorded 41,000 machine hours for the year Goods that cost $502,000 to manufacture according to their job cost sheets were transferred to the finished goods warehouse Sales for the year totalled $723,300 and were all on account The total cost to manufacture these goods according to their job cost sheets was $496,000 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 (dont 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 Overapplied overhead Underapplied overhead 3 b Prepare a journal entry to properly dispose of any balance in the Manufacturing Overhead account ( Do not round intermediate calculations and round your 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 nearest whole dollar amount )

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Ravsten Company uses a job-order costing system. On January 1, the beginning of the current year, the companys inventory balances were as follows: Raw materials$18,500

Ravsten Company uses a job-order costing system. On January 1, the beginning of the current year, the companys inventory balances were as follows:

Raw materials$18,500

Work in process$11,000

Finished goods$30,500

The company applies overhead cost to jobs on the basis of machine-hours. For the current year, the company estimated that it would work 36,500 machine-hours and incur $164,250 in manufacturing overhead cost. The following transactions were recorded for the year:

Raw materials were purchased on account: $210,000.
Raw materials were requisitioned for use in production: $195,000 (80% direct and 20% indirect).
The following costs were incurred for employee services:

Direct labour$164,000

Indirect labour$28,000

Sales commissions$37,500

Administrative salaries$82,000

Heat, power, and water costs were incurred in the factory: $44,250.
Prepaid insurance expired during the year: $12,500 (85% relates to factory operations, and 15% relates to selling and administrative activities).
Advertising costs were incurred, $52,500.
Depreciation was recorded for the year: $63,000 (90% relates to factory operations, and 10% relates to selling and administrative activities).
Manufacturing overhead cost was applied to production. The company recorded 41,000 machine-hours for the year.
Goods that cost $502,000 to manufacture according to their job cost sheets were transferred to the finished goods warehouse.
Sales for the year totalled $723,300 and were all on account. The total cost to manufacture these goods according to their job cost sheets was $496,000.

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 (dont 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

Overapplied overhead
Underapplied overhead

3-b. Prepare a journal entry to properly dispose of any balance in the Manufacturing Overhead account. (Do not round intermediate calculations and round your 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 nearest whole dollar amount.)