Star Videos, Inc., produces short musical videos for sale to retail outlets. The companys balance sheet accounts as of January 1 are given below. Star Videos, Inc. Balance Sheet January 1 Assets Cash $ 92,000 Accounts receivable 115,600 Inventories: Raw materials (film, costumes) $ 17,800 Videos in process 60,200 Finished videos awaiting sale 91,200 169,200 Prepaid insurance 12,600 Studio and equipment (net) 603,000 Total assets $ 992,400 Liabilities and Stockholders Equity Accounts payable $ 211,000 Retained earnings 781,400 Total liabilities and stockholders equity $ 992,400 Because the videos differ in length and in complexity of production, the company uses a job-order costing system to determine the cost of each video produced. Studio (manufacturing) overhead is charged to videos on the basis of camera-hours of activity. The companys predetermined overhead rate for the year ($40 per camera-hour) is based on a cost formula that estimated $280,000 in manufacturing overhead for an estimated allocation base of 7,000 camera-hours. Any underapplied or overapplied overhead is closed to cost of goods sold. The following transactions were recorded for the year: Film, costumes, and similar raw materials purchased on account, $208,500. Film, costumes, and other raw materials issued to production, $219,500 (85% of this material was considered direct to the videos in production, and the other 15% was considered indirect). Utility costs incurred (on account) in the production studio, $81,600. Depreciation recorded on the studio, cameras, and other equipment, $90,000. Three-fourths of this depreciation related to actual production of the videos, and the remainder related to equipment used in marketing and administration. Advertising expense incurred (on account), $155,500. Salaries and wages paid in cash as follows: Direct labor (actors and directors) $ 99,200 Indirect labor (carpenters to build sets, costume designers, and so forth) $ 100,500 Administrative salaries $ 102,400 Prepaid insurance expired during the year, $10,050 (70% related to production of videos, and 30% related to marketing and administrative activities). Miscellaneous marketing and administrative expenses incurred (on account), $10,350. Studio (manufacturing) overhead was applied to videos in production. The company recorded 7,250 camera-hours of activity during the year. Videos that cost $548,000 to produce according to their job cost sheets were transferred to the finished videos warehouse to await sale and shipment. Sales for the year totaled $1,060,000 and were all on account. The total cost to produce the videos that were sold according to their job cost sheets was $591,810. Collections from customers during the year totaled $1,010,000. Payments to suppliers on account during the year, $585,000. Underapplied or overapplied overhead $__?__. Required: 1. Prepare a transaction analysis that records all of the above transactions. 2. Prepare a schedule of cost of goods manufactured for the year. 3. Prepare a schedule of cost of goods sold for the year. 4. Prepare an income statement for the year. PLEASE SHOW ALL WORK AND BOLD ANSWERS. THANK YOU!!

Prepare a transaction analysis that records all of the above transactions. (Amounts to be deducted should be indicated by a minus sign.)

Star Videos, Inc.

Transaction Analysis

For the Year Ended December 31

Cash

Accounts Receivable

Raw Materials

Videos in Process

Finished Goods

Manufacturing Overhead

Prepaid Insurance

Studio & Equipment (net)

=

Accounts Payable

Retained Earnings

Beginning balance @1/1

$92,000

$115,600

$17,800

$60,200

$91,200

$12,600

$603,000

=

$211,000

$781,400

(a)

Raw material purchases

=

(b)

Raw materials used

=

(c)

Utility costs

=

(d)

Depreciation charges

=

(e)

Advertising

=

(f)

Salaries & wages

=

(g)

Prepaid insurance

=

(h)

Miscellaneous marketing

=

(i)

Applied overhead

=

(j)

Transfer completed videos to finished goods

=

(k)

Sales

=

(l)

Transfer finished goods to cost of goods sold

=

(m)

Cash collections from customers

=

(n)

Payment to suppliers

=

(o)

=

Ending balances @ 12/31

=

Prepare a schedule of cost of goods manufactured for the year.

Star Videos, Inc.
Schedule of Cost of Goods Manufactured
For the Year Ended December 31
Total manufacturing costs
Cost of goods manufactured

Prepare a schedule of cost of goods sold for the year.

Star Videos, Inc.
Schedule of Cost of Goods Sold
For the Year Ended December 31

Prepare an income statement for the year.

Star Videos, Inc.
Income Statement
For the Year Ended December 31