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 $ $80,000$

Accounts receivable $119,000$

Inventories:

Raw materials $($film$,$ costumes$)$ $ $47,000$

Videos in process $20,000$

Finished videos awaiting sale $98,000165,000$

Prepaid insurance $12,400$

Total current assets $376,400$

Studio and equipment $764,000$

Less accumulated depreciation $227,000537,000$

Total assets $ $913,400$

Liabilities and Stockholders' Equity

Accounts payable $ $120,400$

Capital stock $ $506,000$

Retained earnings $287,000793,000$

Total liabilities and stockholders' equity $ $913,400$

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$$s predetermined overhead rate for the year is based on a cost formula that estimated $$230,000$ 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, $$202,000.$

b$.$ Film, costumes, and other raw materials used in production, $$217,000(85\%$ of this material was direct to the videos in production, and the other $15\%$ was indirect$).$

c$.$ Utility costs incurred in the production studio, $$89,000.$

d$.$ Depreciation on the studio, cameras, and other equipment, $$101,000.$ 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, $$147,000.$

f$.$ Costs for salaries and wages were incurred as follows:

Direct labor $($actors and directors$)$ $ $99,000$

Indirect labor $($carpenters to build sets,

costume designers, and so forth$)$ $ $127,000$

Administrative salaries $ $112,000$

g$.$ Prepaid insurance expired during the year, $$8,700(80\%$ related to production of videos, and $20\%$ related to marketing and administrative activities$).$

h$.$ Miscellaneous marketing and administrative expenses incurred, $$10,300.$

i$.$ Studio $($manufacturing$)$ overhead was applied to videos in production. The company used $7,800$ camera$-$hours during the year.

j$.$ Videos that cost $$567,000$ to produce were transferred to the finished videos warehouse.

k$.$ Sales for the year totaled $$959,000$ and were all on account. The total cost to produce these videos was $$617,000.$

l$.$ Collections from customers during the year totaled $$867,000.$

m$.$ Payments to suppliers on account during the year, $$517,000$; payments to employees for salaries and wages, $$324,000.$

Required:

$1.$ Prepare a T$-$account for each account on the company$$s balance sheet and enter the beginning balances.

$2.$ Record the transactions in the T$-$accounts. Key your entries to the letters $($a$)$ through $($m$)$ above.

$3.$ Is the Studio $($manufacturing$)$ Overhead account underapplied or overapplied? 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.