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

Supreme Videos, Incorporated Balance Sheet January 1
Assets
Current assets:
Cash		$ 65,000
Accounts receivable		104,000
Inventories:
Raw materials (film, costumes)	$ 32,000
Videos in process	47,000
Finished videos awaiting sale	83,000	162,000
Prepaid insurance		9,400
Total current assets		340,400
Studio and equipment	734,000
Less accumulated depreciation	212,000	522,000
Total assets		$ 862,400
Liabilities and Stockholders' Equity
Accounts payable		$ 168,400
Capital stock	$ 422,000
Retained earnings	272,000	694,000
Total liabilities and stockholders' equity		$ 862,400

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 $287,000 in manufacturing overhead for an estimated allocation base of 7,000 camera-hours. The following transactions occurred during the year:

1. Film, costumes, and similar raw materials purchased on account, $187,000.
2. Film, costumes, and other raw materials used in production, $202,000 (85% of this material was considered direct to the videos in production, and the other 15% was considered indirect).
3. Utility costs incurred in the production studio, $74,000.
4. Depreciation recorded on the studio, cameras, and other equipment, $86,000. Three-fourths of this depreciation related to production of the videos, and the remainder related to equipment used in marketing and administration.
5. Advertising expense incurred on account, $132,000.
6. Costs for salaries and wages were incurred as follows:

Direct labor (actors and directors)	$ 84,000
Indirect labor (carpenters to build sets, costume designers, and so forth)	$ 112,000
Administrative salaries	$ 97,000

1. Prepaid insurance expired during the year, $7,200 (80% related to production of videos, and 20% related to marketing and administrative activities).
2. Miscellaneous marketing and administrative expenses incurred, $8,800.
3. Studio (manufacturing) overhead was applied to videos in production. The company used 7,250 camera-hours during the year.
4. Videos that cost $552,000 to produce according to their job cost sheets were transferred to the finished videos warehouse to await sale and shipment.
5. Sales for the year totaled $929,000 and were all on account. The total cost to produce these videos according to their job cost sheets was $602,000.
6. Collections from customers during the year totaled $852,000.
7. Payments to suppliers on account during the year, $502,000; payments to employees for salaries and wages, $287,000.

Required:

1. Prepare a schedule of cost of goods sold.

2. Prepare an income statement for the year.