Supreme Videos, Inc , produces short musical videos for sale to retail outlets The companys balance sheet accounts as of January 1, are given below Supreme Videos, Inc Balance Sheet January 1 Assets Current assets Cash $ 79,000 Accounts receivable 118,000 Inventories Raw materials (film, costumes) $ 46,000 Videos in process 24,000 Finished videos awaiting sale 97,000 167,000 Prepaid insurance 12,200 Total current assets 376,200 Studio and equipment 762,000 Less accumulated depreciation 226,000 536,000 Total assets $ 912,200 Liabilities and Stockholders' Equity Accounts payable $ 121,200 Capital stock $ 505,000 Retained earnings 286,000 791,000 Total liabilities and stockholders' equity $ 912,200 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 is based on a cost formula that estimated $294,000 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, $201,000 Film, costumes, and other raw materials used in production, $216,000 (80 of this material was considered direct to the videos in production, and the other 20 was considered indirect) Utility costs incurred on account in the production studio, $88,000 Depreciation recorded on the studio, cameras, and other equipment, $100,000 Three fourths of this depreciation related to production of the videos, and the remainder related to equipment used in marketing and administration Advertising expense incurred on account, $146,000 Costs for salaries and wages were incurred on account as follows Direct labor (actors and directors) $ 98,000 Indirect labor (carpenters to build sets, costume designers, and so forth) $ 126,000 Administrative salaries $ 111,000 Prepaid insurance expired during the year, $8,600 (75 related to production of videos, and 25 related to marketing and administrative activities) Miscellaneous marketing and administrative expenses incurred on account, $10,200 Studio (manufacturing) overhead was applied to videos in production The company used 8,600 camera hours during the year Videos that cost $566,000 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 $957,000 and were all on account The total cost to produce these videos according to their job cost sheets was $616,000 Collections from customers during the year totaled $866,000 Payments to suppliers on account during the year, $516,000 payments to employees for salaries and wages, $323,000 Required 1 Prepare a T account for each account on the companys 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 Cash Accounts Receivable Beg Bal Beg Bal End Bal End, Bal Raw Materials Prepaid Insurance Beg Bal Beg Bal End Bal End Ba 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 Beg Bal Bea Bal End Bal End Bal Insurance Expense Advertising Expense Beg Bali Beg Bal Miscellaneous Expense Administrative Salaries Expense Beg Bal Beg Bal End Bal Cost of Goods Sold Sales Beg Bal Beg Bal L N End Bal End Bal Salaries Wages Payable Accounts Payable Beg Bal Beg Bal End Bal End Bal Retained Earnings Capital Stock Beg Bal Beg Bal End Bal End Bal Req 1 and 2 Reg 3 Reg 4 Reg 5 Reg 6 Is the Studio (manufacturing) Overhead account underapplied or overapplied for the year Manufacturing overhead was by for the year Req 1 and 2 Reg 3 Reg 4 Reg 5 Reg 6 Prepare a schedule of cost of goods manufactured Supreme Videos, Inc Schedule of Cost of Goods Manufactured Direct materials Total raw materials available Raw materials used in production Total manufacturing costs Cost of goods manufactured Req 1 and 2 Reg 3 Req 4 Req 5 Reg 6 Prepare a schedule of cost of goods sold Supreme Videos, Inc Schedule of Cost of Goods Sold Req 1 and 2 Reg 3 Reg 4 Reg 5 Reg 6 Prepare an income statement for the year SUPREME VIDEOS, INC Income Statement For the Year Ended December 31 Selling and administrative expenses

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Supreme Videos, Inc., produces short musical videos for sale to retail outlets. The companys balance sheet accounts as of January 1, are given below. Supreme

Supreme Videos, Inc., produces short musical videos for sale to retail outlets. The companys balance sheet accounts as of January 1, are given below.

Supreme Videos, Inc. Balance Sheet January 1
Assets
Current assets:
Cash			$	79,000
Accounts receivable				118,000
Inventories:
Raw materials (film, costumes)	$	46,000
Videos in process		24,000
Finished videos awaiting sale		97,000		167,000
Prepaid insurance				12,200
Total current assets				376,200
Studio and equipment		762,000
Less accumulated depreciation		226,000		536,000
Total assets			$	912,200
Liabilities and Stockholders' Equity
Accounts payable			$	121,200
Capital stock	$	505,000
Retained earnings		286,000		791,000
Total liabilities and stockholders' equity			$	912,200

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 is based on a cost formula that estimated $294,000 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, $201,000.
Film, costumes, and other raw materials used in production, $216,000 (80% of this material was considered direct to the videos in production, and the other 20% was considered indirect).
Utility costs incurred on account in the production studio, $88,000.
Depreciation recorded on the studio, cameras, and other equipment, $100,000. Three-fourths of this depreciation related to production of the videos, and the remainder related to equipment used in marketing and administration.
Advertising expense incurred on account, $146,000.
Costs for salaries and wages were incurred on account as follows:


Direct labor (actors and directors)	$	98,000
Indirect labor (carpenters to build sets, costume designers, and so forth)	$	126,000
Administrative salaries	$	111,000

Prepaid insurance expired during the year, $8,600 (75% related to production of videos, and 25% related to marketing and administrative activities).
Miscellaneous marketing and administrative expenses incurred on account, $10,200.
Studio (manufacturing) overhead was applied to videos in production. The company used 8,600 camera-hours during the year.
Videos that cost $566,000 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 $957,000 and were all on account. The total cost to produce these videos according to their job cost sheets was $616,000.
Collections from customers during the year totaled $866,000.
Payments to suppliers on account during the year, $516,000; payments to employees for salaries and wages, $323,000.

Required:

1. Prepare a T-account for each account on the companys 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.

image text in transcribed

Cash Accounts Receivable Beg. Bal. Beg. Bal. End. Bal End, Bal Raw Materials Prepaid Insurance Beg. Bal. Beg. Bal. End. Bal. End. Ba 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 Beg. Bal. Bea Bal End. Bal End. Bal. Insurance Expense Advertising Expense Beg. Bali Beg. Bal. Miscellaneous Expense Administrative Salaries Expense Beg. Bal. Beg. Bal. End. Bal. Cost of Goods Sold Sales Beg. Bal. Beg. Bal. L N End. Bal. End. Bal. Salaries & Wages Payable Accounts Payable Beg. Bal. Beg. Bal. End. Bal. End. Bal. Retained Earnings Capital Stock Beg Bal. Beg. Bal. End. Bal. End. Bal. Req 1 and 2 Reg 3 Reg 4 Reg 5 Reg 6 Is the Studio (manufacturing) Overhead account underapplied or overapplied for the year? Manufacturing overhead was by for the year. Req 1 and 2 Reg 3 Reg 4 Reg 5 Reg 6 Prepare a schedule of cost of goods manufactured. Supreme Videos, Inc. Schedule of Cost of Goods Manufactured Direct materials: Total raw materials available Raw materials used in production Total manufacturing costs Cost of goods manufactured Req 1 and 2 Reg 3 Req 4 Req 5 Reg 6 Prepare a schedule of cost of goods sold. Supreme Videos, Inc. Schedule of Cost of Goods Sold Req 1 and 2 Reg 3 Reg 4 Reg 5 Reg 6 Prepare an income statement for the year. SUPREME VIDEOS, INC. Income Statement For the Year Ended December 31 Selling and administrative expenses