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

Supreme Videos, Incorporated

Balance Sheet

January $1$

Assets

Current assets:

Cash $ $68,000$

Accounts receivable $107,000$

Inventories:

Raw materials $($film$,$ costumes$)$ $ $35,000$

Videos in process $25,000$

Finished videos awaiting sale $86,000146,000$

Prepaid insurance $10,000$

Total current assets $331,000$

Studio and equipment $740,000$

Less accumulated depreciation $215,000525,000$

Total assets $ $856,000$

Liabilities and Stockholders' Equity

Accounts payable $ $156,000$

Capital stock $ $425,000$

Retained earnings $275,000700,000$

Total liabilities and stockholders' equity $ $856,000$

Because the videos differ in length and 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 based on camera$-$hours of activity. The company$$s predetermined overhead rate for the year is based on a cost formula that estimated $$360,000$ in manufacturing overhead for an estimated allocation base of $9,000$ camera$-$hours. The following transactions occurred during the year:

Film, costumes, and similar raw materials purchased on account, $$190,000.$

Film, costumes, and other raw materials used in production, $$205,000(85\%$ of this material was direct to the videos in production, and the other $15\%$ was indirect$).$

Utility costs incurred in the production studio, $$77,000.$

Depreciation on the studio, cameras, and other equipment, $$89,000.$ 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, $$135,000.$

Costs for salaries and wages were incurred as follows:

Direct labor $($actors and directors$)$ $ $87,000$

Indirect labor $($carpenters to build sets,

costume designers, and so forth$)$ $ $115,000$

Administrative salaries $ $100,000$

Prepaid insurance expired during the year, $$7,500(80\%$ related to production of videos, and $20\%$ related to marketing and administrative activities$).$

Miscellaneous marketing and administrative expenses incurred, $$9,100.$

Studio $($manufacturing$)$ overhead was applied to videos in production. The company used $9,100$ camera$-$hours during the year.

Videos that cost $$555,000$ to produce were transferred to the finished videos warehouse.

Sales for the year totaled $$935,000$ and were all on account. The total cost to produce these videos was $$605,000.$

Collections from customers during the year totaled $$855,000.$

Payments to suppliers on account during the year, $$505,000$; payments to employees for salaries and wages, $$290,000.$

Required:

Prepare a T$-$account for each account on the company$$s balance sheet and enter the beginning balances.

Record the transactions in the T$-$accounts. Key your entries to the letters $($a$)$ through $($m$)$ above.

Is the Studio $($manufacturing$)$ Overhead account underapplied or overapplied? By how much?

Prepare a schedule of cost of goods manufactured.

Prepare a schedule of cost of goods sold.

Prepare an income statement.