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 $ 67,000 Accounts receivable 106,000 Inventories: Raw materials (film, costumes) $ 34,000 Videos in process 30,000 Finished videos awaiting sale 85,000 149,000 Prepaid insurance 9,800 Total current assets 331,800 Studio and equipment 738,000 Less accumulated depreciation 214,000 524,000 Total assets $ 855,800 Liabilities and Stockholders' Equity Accounts payable $ 157,800 Capital stock $ 424,000 Retained earnings 274,000 698,000 Total liabilities and stockholders' equity $ 855,800 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 $352,000 in manufacturing overhead for an estimated allocation base of 8,000 camera-hours. The following transactions occurred during the year: Film, costumes, and similar raw materials purchased on account, $189,000. Film, costumes, and other raw materials used in production, $204,000 (80% of this material was considered direct to the videos in production, and the other 20% was considered indirect). Utility costs incurred in the production studio, $76,000. Depreciation recorded on the studio, cameras, and other equipment, $88,000. 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, $134,000. Costs for salaries and wages were incurred as follows: Direct labor (actors and directors) $ 86,000 Indirect labor (carpenters to build sets, costume designers, and so forth) $ 114,000 Administrative salaries $ 99,000 Prepaid insurance expired during the year, $7,400 (75% related to production of videos, and 25% related to marketing and administrative activities). Miscellaneous marketing and administrative expenses incurred, $9,000. Studio (manufacturing) overhead was applied to videos in production. The company used 8,200 camera-hours during the year. Videos that cost $554,000 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 $933,000 and were all on account. The total cost to produce these videos according to their job cost sheets was $604,000. Collections from customers during the year totaled $854,000. Payments to suppliers on account during the year, $504,000; payments to employees for salaries and wages, $289,000. 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. 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.

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. $ 67,000 106,000 Supreme Videos, Incorporated Balance Sheet January 1 Assets Current assets: Cash Accounts receivable Inventories: Raw materials (film, costumes) $ 34,000 Videos in process 30,000 Finished videos awaiting sale 85,000 Prepaid insurance Total current assets Studio and equipment 738,000 Less accumulated depreciation 214,000 Total assets Liabilities and Stockholders' Equity Accounts payable Capital stock $ 424,000 Retained earnings 274,000 Total liabilities and stockholders' equity 149,000 9,800 331,800 524,000 $ 855,800 $ 157,800 698,000 $ 855,800 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 $352,000 in manufacturing overhead for an estimated allocation base of 8,000 camera-hours. The following transactions occurred during the year: a. Film, costumes, and similar raw materials purchased on account, $189,000. b. Film, costumes, and other raw materials used in production, $204,000 (80% of this material was considered direct to the videos in production, and the other 20% was considered indirect). c. Utility costs incurred in the production studio, $76,000. d. Depreciation recorded on the studio, cameras, and other equipment, $88,000. 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, $134,000. e. Advertising expense incurred on account, $134,000. f. Costs for salaries and wages were incurred as follows: $ 86,000 Direct labor (actors and directors) Indirect labor (carpenters to build sets, costume designers, and so forth) Administrative salaries $ 114,000 $ 99,000 g. Prepaid insurance expired during the year, $7,400 (75% related to production of videos, and 25% related to marketing and administrative activities). h. Miscellaneous marketing and administrative expenses incurred, $9,000. i. Studio (manufacturing) overhead was applied to videos in production. The company used 8,200 camera-hours during the year. j. Videos that cost $554,000 to produce according to their job cost sheets were transferred to the finished videos warehouse to await sale and shipment. k. Sales for the year totaled $933,000 and were all on account. The total cost to produce these videos according to their job cost sheets was $604,000. 1. Collections from customers during the year totaled $854,000. m. Payments to suppliers on account during the year, $504,000; payments to employees for salaries and wages, $289,000. Required: 1. Prepare a T-account for each account on the company's balance sheet and enter the beginning balances. 2. Record the transactions directly into the T-accounts. 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. Req 1 and 2 Req 3 Reg 4 Reg 5 Reg 6 Prepare a T-account for each account on the company's balance sheet and enter the beginning balances. Record the transactions directly Cash Credit Debit Beginning Balance Debit Beginning Balance 67,000 Accounts Receivable Credit 106,000 854,000 933,000 185,000 854,000 k. Ending Balance 921,000 Ending Balance Raw Materials Prepaid Insurance Credit Debit Credit Debit Beginning Balance Beginning Balance 9,800 Ending Balance Ending Balance 9,800 Videos in Process Finished Goods Credit Credit Debit Beginning Balance Debit Beginning Balance Ending Balance Ending Balance Studio and Equipment Debit Credit Accumulated Depreciation Debit Credit Beginning Balance 214,000 Beginning Balance Ending Balance 214,000 Ending Balance Studio Overhead Depreciation Expense Credit Credit Debit Beginning Balance Debit Beginning Balance Ending Balance Ending Balance Insurance Expense Advertising Expense Credit Credit Debit Beginning Balance Debit Beginning Balance Ending Balance Ending Balance Miscellaneous Expense Debit Credit Administrative Salaries Expense Debit Credit Beginning Balance Beginning Balance Ending Balance Ending Balance Cost of Goods Sold Sales Credit Debit Credit Debit Beginning Balance Beginning Balance Ending Balance Ending Balance Salaries & Wages Payable Accounts Payable Debit Credit Debit Credit Beginning Balance Beginning Balance Ending Balance Ending Balance Retained Earnings Capital Stock Debit Credit Debit Credit Beginning Balance Beginning Balance Ending Balance Ending Balance Complete this question by entering your answers in the tabs below. Req 1 and 2 Req3 Req 4 Req 5 Reg 6 Is the Studio (manufacturing) Overhead account underapplied or overapplied for the year? By how much? Manufacturing overhead was by for the year. Complete this question by entering your answers in the tabs below. Req 1 and 2 Reg 3 Reg 4 Req 5 Reg 6 Prepare a schedule of cost of goods manufactured. Supreme Videos, Incorporated Schedule of Cost of Goods Manufactured Direct materials: Total raw materials available Raw materials used in production Direct materials used in production Total manufacturing costs added to production Total manufacturing costs to account for 0 Cost of goods manufactured Complete this question by entering your answers in the tabs below. Req 1 and 2 Req3 Req 4 Req 5 Req 6 Prepare a schedule of cost of goods sold. Supreme Videos, Incorporated Schedule of Cost of Goods Sold