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 $ $77,000$

Accounts receivable $116,000$

Inventories:

Raw materials $($film$,$ costumes$)$ $ $44,000$

Videos in process $22,000$

Finished videos awaiting sale $95,000161,000$

Prepaid insurance $11,800$

Total current assets $365,800$

Studio and equipment $758,000$

Less accumulated depreciation $224,000534,000$

Total assets $ $899,800$

Liabilities and Stockholders' Equity

Accounts payable $ $112,800$

Capital stock $ $503,000$

Retained earnings $284,000787,000$

Total liabilities and stockholders' equity $ $899,800$

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$$s predetermined overhead rate for the year is based on a cost formula that estimated $$200,000$ in manufacturing overhead for an estimated allocation base of $5,000$ camera$-$hours. The following transactions occurred during the year:

Film, costumes, and similar raw materials purchased on account, $$199,000.$

Film, costumes, and other raw materials used in production, $$214,000(75\%$ of this material was considered direct to the videos in production, and the other $25\%$ was considered indirect$).$

Utility costs incurred in the production studio, $$86,000.$

Depreciation recorded on the studio, cameras, and other equipment, $$98,000.$ 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, $$144,000.$

Costs for salaries and wages were incurred as follows:

Direct labor $($actors and directors$)$ $ $96,000$

Indirect labor $($carpenters to build sets,

costume designers, and so forth$)$ $ $124,000$

Administrative salaries $ $109,000$

Prepaid insurance expired during the year, $$8,400(70\%$ related to production of videos, and $30\%$ related to marketing and administrative activities$).$

Miscellaneous marketing and administrative expenses incurred, $$10,000.$

Studio $($manufacturing$)$ overhead was applied to videos in production. The company used $9,000$ camera$-$hours during the year.

Videos that cost $$564,000$ 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 $$953,000$ and were all on account. The total cost to produce these videos according to their job cost sheets was $$614,000.$

Collections from customers during the year totaled $$864,000.$

Payments to suppliers on account during the year, $$514,000$; payments to employees for salaries and wages, $$321,000.$

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. Key your entries to the letters $($a$)$ through $($m$)$ above.

$3.$ 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.