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Supreme Videos, Incorporated, produces short musical videos for sale to retail outletsThe company's balance sheet accounts as of January 1, are given below. 66,000 105,000
Supreme Videos, Incorporated, produces short musical videos for sale to retail outletsThe company's balance sheet accounts as of January 1, are given below. 66,000 105,000 Supreme Videos, Incorporated Balance Sheet January 1 Assets Current assets : Cash Accounts receivable Inventories : materials (film , costumes ) Videos in process Finished videos avaiting sale Prepaid insurance Total current assets Studio and equipment Less accumulated depreciation Total assets Liabilities and Stockholders Equity Accounts payable Capital stock Retained earnings Total liabilities and stockholders ' equity 33,000 48,000 84,000 165,000 345,600 736,000 213,000 523,000 868,600 172,600 423,000 273,000 696,000 868,600 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 $ 210,000 in manufacturing overhead for an estimated allocation base of 5,000 camera -hours . The following transactions occurred during the year aFilm, costumes , and similar raw materials purchased on account , $ 188,000 . b. Film , costumes , and other raw materials used in production , $203,000 (80 % of this material was considered direct to the videos in production , and the other 20% was considered indirect ) . costs incurred in the production studio , $75,000 . d. Depreciation recorded on the studio , cameras , and other equipment , $87,000 . 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 , $133,000 . Costs for salaries and wages were incurred as follows :
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