Supreme Videos, Inc., produces short musical videos for sale to retail outlets. The company's balance sheet accounts as of January 1, the beginning of its fiscal year, are given below. Supreme Videos, Inc. Balance Sheet January 1 Assets Current assets: Cash Accounts receivable Inventories: Raw materials (film, costumes) Videos in process Finished videos awaiting sale $78,000 117,000 $45,000 23,000 96,000 164,000 Prepaid insurance 12,000 371,000 Total current assets Studio and equipment Less accumulated depreciation 760,000 225,000 535,000 Total assets $906,000 Liabilities and Stockholders' Equity $117,000 Accounts payable Capital stock Retained earnings $504,000 285,000 789,000 Total liabilities and stockholders' equity $906,000 Because the videos differ in length and in complexity 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 $270,000 in manufacturing overhead for an estimated allocation base of 6,000 camera-hours. The following transactions were recorded for the year. a. Film, costumes, and similar raw materials purchased on account, $200,000 b. Film, costumes, and other raw materials issued to production, $215,000 (80% of this material was considered direct to the videos in production, and the other 20% was considered indirect) c. Utility costs incurred in the production studio, $87,000 for account. d. Depreciation recorded on the studio, cameras, and other equipment, $99,000. Three-fourths of this depreciation related to actual production of the videos, and the remainder related to equipment used in marketing and administration. e. Advertising expense incurred, $145,000 for account. f. Costs for salaries and wages were incurred as follows: $ 97,000 Direct labor (actors and directors) Indirect labor (carpenters to build sets, costume designers, and so forth) Administrative salaries $125,000 $ 110,000 g. Prepaid insurance expired during the year, $8,500 (75% related to production of videos, and 25% related to marketing and administrative activities). h. Miscellaneous marketing and administrative expenses incurred, S10.100 for account i Studio (manufacturing) overhead was applied to videos in production. The company recorded 7,800 camera-hours of activity during the year. Videos that cost $565,000 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 $955,000 and were all on account. The total cost to produce these videos according to their job cost sheets was $615,000. 1. Collections from customers during the year totaled $865,000 m.Payments to suppliers on account during the year, 5515,000; payments to employees for salaries and wages. $322,000 Required: 182. Prepare a T-account for each account on the company's balance sheet, and enter the beginning balances Make an entry directly into the T-accounts for transactions (a) through (m). Cash Accounts Receivable Beg. Bal Beg Bal End Bal End. Bal Raw Materials Prepaid Insurance Bog Bal Beg Bal End Bal End. Bal Videos in Process Finished Goods Beg. Bal Beg. Bal. End. Bal End. Bal Studio and Equipment Accumulated Depreciation Beg. Bal Beg. Bal End. Bal. End. Bal Studio Overhead Depreciation Expense End. Bal End. Bal Insurance Expense Advertising Expense End Bal End. Bal Miscellaneous Expense Administrative Salaries Expense End, Bal End Bal Sales Cost of Goods Sold End Bal End Bal Accounts Payable Salaries & Wages Payable Beg Bal End. Bal. End. Bal Capital Stock Retained Earnings Beg Bal Beg Bal End. Bal End Bar 3. Is the Studio (manufacturing) Overhead account underapplied or overapplied for the year? By how much? Manufacturing overhead was by for the year 4. Prepare an income statement for the year. SUPREME VIDEOS, INC. Income Statement For the Year Ended December 31 0 Selling and administrative expenses: 0 $ 0