Raw materials $12,000 Work in process 14,000 Finished goods 18,000 During the year, the following transactions were completed: a. Raw materials were purchased on account, $135,000. b. Raw materials were issued from the storeroom for use in production, $175,000 (70% direct and remaining indirect). c. Employee salaries and wages were accrued as follows: direct labour, $135,000; indirect labour, $75,000; selling and administrative salaries, $145,000. d. Utility costs were incurred in the factory, $85,000. e. Advertising costs were incurred, $120,000. f. Prepaid insurance expired during the year, $40,000 (75% related to factory operations, and 25% related to selling and administrative activities). g. Depreciation was recorded, $140,000 (85% related to factory assets, and 15% related to selling and administrative assets). h. Manufacturing overhead was applied to jobs at the rate of 175% of direct labour cost. i. Goods that cost $800,000 to manufacture according to their job cost sheets were transferred to the finished goods warehouse. j. Sales for the year totaled $1,200,000 and were all on account. The total cost to manufacture these goods according to their job cost sheets was $820,000. Required: 1. Prepare journal entries to record the transactions for the year. 2. Prepare T-accounts for raw materials, work in process, finished goods, manufacturing overhead, and cost of goods sold. Post the appropriate parts of your journal entries to these T-accounts. Compute the ending balance in each account. (Do not forget to enter the beginning balances in the inventory accounts.) 3. Is manufacturing overhead underapplied or overapplied for the year? Prepare a journal entry to close this balance to cost of goods sold.

Raw materials $12,000 Work in process 14,000 Finished goods 18,000 During the year, the following transactions were completed Raw materials were purchased an account, $135,000. Raw materials were issued from the storeroom for use in production, $175,000 (70% direet and remaining indirect). c. Employee salaries and wages were scrued as follows direct labour, 5135,000; indirect labour, 575,000, selling and administrative salaries, 5145,000. d. Utility costs were incurred in the factory, $85,000. e. Advertising cents were incurred, $120,000. 1. Prepaid insurance expired during the year, S40,000 (75% related to factory operations, and 25 related to selling and administrative activities 9. Depreciation was recorded, S140,000 (05% related to factory assets, and 15% related to selling and administrative assets). h. Manufacturing overhead was applied to jobs at the rate of 175% of direct labour cost. Goods that cost $100,000 to manufacture necording to their job cost sheets were transferred to the finished goods warehouse Sales for the year totaled $1,200,000 and were all on account. The total cost to manufacture these goods necording to their job cost sheets was 5820,000. Required 1. Prepare journal entries to record the transactions for the year. 2. Prepare T-accounts for raw materials, work in process, finished goods, manufacturing overhead, and cost of goods sold. Pont the appropriate parts of your journal entre to these T-accounts. Compute the ending balance in each account. (Do not forget to enter the beginning balances in the inventory accounts.) 3. Is manufacturing overhead underapplied or overapplied for the year? Prepare a journal entry to close this balance to cast of goods sold 97