Supreme Videos, Inc., produces short musical videos for sale to retail outlets. The company's balance sheet accounts as of January 1, are given below Supreme Videos, Inc. Balance Sheet January 1 Assets Current assets: $ 77,000 116,000 Cash Accounts receivable Inventories Raw materials (film, costumes) $44,000 22,000 95,000 Videos in process Finished videos awaiting sale 161,000 11,800 365,800 Prepaid insurance Total current assets Studio and equipment 758,000 224,000 Less accumulated depreciation Total assets 534,000 $899,800 Liabilities and Stockholders' Equity Accounts payable Capital stock Retained earnings Total liabilities and stockholders' equity $112,800 $503,000 284,000 787,000 $899,800 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 $200,000 in manufacturing overhead for an estimated allocation base of 5,000 camera-hours. The following transactions occurred during the year: a. Film, costumes, and similar raw materials purchased on account, $199,000 b. Film, costumes, and other raw materials used in production, $214,000 (75% of this material was considered direct to the videos in production, and the other 25% was considered indirect) c. Utility costs incurred on account in the production studio, $86,000 d. Depreciation recorded on the studio, cameras, and other equipment, $98,000. 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, $144,000 f. Costs for salaries and wages were incurred on account as follows Direct labor (actors and directors) Indirect labor (carpenters to build sets, $ 96,000 s 124,000 $109,000 costume designers, and so forth) Administrative salaries g. Prepaid insurance expired during the year, $8,400 (70% related to production of videos, and 30% related to marketing and administrative activities). h. Miscellaneous marketing and administrative expenses incurred on account, $10,000. i. Studio (manufacturing) overhead was applied to videos in production. The company used 9,000 camera-hours during the year. j. Videos that cost $564,000 to produce according to their job cost sheets were transferred to the finished videos warehouse to await sale and shipment. k. Sales for the year totaled $953,000 and were all on account. The total cost to produce these videos according to their job cost sheets was $614,000. I. Collections from customers during the year totaled $864,000 m. Payments to suppliers on account during the year, $514,000; payments to employees for salaries and wages, $321,000 Required 1. Prepare a T-account for each account on the company's balance sheet and enter the beginning balances 2. Record the transactions directly into the T-accounts. Key your entries to the letters (a) through (m) above. 3. Is the Studio (manufacturing) Overhead account underapplied or overapplied for the year? By how much? 4. Prepare a schedule of cost of goods manufactured 5. Prepare a schedule of cost of goods sold. 6. Prepare an income statement for the year Complete this question by entering your answers in the tabs below. Req 3 Req 6 Req 4 Req 1 and 2 Req 5 Prepare a T-account for each account on the company's balance sheet and enter the beginning balances. Record the transactions directly i accounts Cash Accounts Receivable 77,000 Beg. Bal Beg. Bal 116,000 77,000 116,000 End. Bal End. Bal Raw Materials Prepaid Insurance 44,000 11,800 Beg. Bal Beg. Bal 199,000 11,800 243,000 End. Bal End. Bal Videos in Process Finished Goods 95,000 Beg. Bal 22,000 Beg. Bal 95,000 End. Bal 22,000 End. Bal Studio and Equipment Accumulated Depreciation Beg. Bal 758,000 Beg. Bal. 224,000 224,000 End. Bal 758,000 End. Bal Studio Overhead Depreciation Expense Beg. Ball Beg. Bal. End. Bal. End. Bal. Insurance Expense Advertising Expense Beg. Bal Beg. Bal Miscellaneous Expense Administrative Salaries Expense Beg. Bal Beg. Bal End. Bal Cost of Goods Sold Sales Beg. Bal. Beg. Bal. End. Bal End. Bal Salaries & Wages Payable Accounts Payable Beg. Bal Beg. Bal 112,800 End. Bal. 112,800 End. Bal. Retained Earnings Capital Stock Beg. Bal 284,000 Beg. Bal. 503,000 503,000 284,000 End. Bal. End. Bal