Supreme Videos, Inc. Balance Sheet January 1 Assets Current assets: Cash $ 63.000 Accounts receivable 102,000 Inventories: Raw materiala (film, costumes) 30,000 Videos in process 45.000 Finished videos awaiting sale 81,000 156,000 Prepaid insurance 9,000 Total current assets 330,000 Studio and equipment 730,000 Less accumulated depreciation 210,000 520,000 Total assets $850,000 Liabilities and Stockholders' Equity Accounts payable $160,000 Capital stock $420,000 Retained earnings 270,000 690,000 Total liabilities and $850,000 stockholders' equity 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 company's predetermined overhead rate for the year is based on a cost formula that estimated $280.000 in manufacturing overhead for an estimated allocation base of 7.000 camera-hours. The following transactions occurred during the year Film, costumes, and similar raw materials purchased on account $185.000 b. Fim, costumes and other raw materials used in production, $200.000 (85 of this material was considered direct to the videos in production and the other 15 was considered indirect c. Utility costs incurred on account in the production studio, $72.000 d. Depreciation recorded on the studio, cameras, and other equipment. $84,000. Three-fourths of this depreciation related to production of the videos, and the remainder related to equipment used in marketing and administration e Advertising expense incurred on account $130 000 1 Costs for salaries and wages were incurred on account as follows: