Ravsten Company uses a job-order costing system. On January t, the beginning of the current year, the company's inventory balances were as follows: 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 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 $42000 e. Prepaid insurance expired during the year $10,000 (90\% relates to foctory aperotions, and 10\% relates to seling and administrative activities) f. Advertising costs were incurred, $50,000 9. Depreciotion was recorded for the year $60,000(85% relates to factory operations, and 15% relates to seling and administrative activities) h. Manufacturing overhead cost was applied to production. The company recorded 40.000 machine-hours for the yeat 1. Goods that cost $480.000 to manufacture according to theirjob cost sheets were transferred to the finished goods warehouse: 1. Sales for the year totaled $700.000 and were all on account. The total cost to manufacture these goods according to their job cost Required: 1. Prepare journal entries to record the transactions given above. (Do not round intermediate calculations. If no entry is a transaction/event, select "No journal entry required" in the first occount field.) Journal entry worksheet Kaw materials were purchased on account: $200,000. Note: Enter debits before credits. 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. 3-0. Is manufacturing overhead underapplied or overapplied for the year? Underapplied overhead Overapplied overhead 3-b. Prepare a journal entry to properly dispose of any balance in the Manufacturing Overhead account. (Round your percentoges and final answers to 2 decimal places. If no entry is required for a transaction/event, select "No journal entry required" in the first Journal entry worksheet Record the entry to properly dispose of any balance in the Manufacturing Overhead account. Notet Entec debits before crediti. 4. Prepare an income statement for the year. (Do not round intermediate calculations and round your final answers to nea whole dollar amount.)
