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 $ 63,000 Accounts receivable 102,000 Inventories: Raw materials (film, costumes) $ 30,000 Videos in process 45,000 Finished videos awaiting sale 81,000 156,000 Prepaid insurance 9,000 Total current assets 330,000 Studio and equipment 730,000 Less accumulated depreciation 210,000 520,000 Total assets $ 850,000 Liabilities and Stockholders' Equity Accounts payable $ 160,000 Capital stock $ 420,000 Retained earnings 270,000 690,000 Total liabilities and stockholders' equity $ 850,000 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 $280,000 in manufacturing overhead for an estimated allocation base of 7,000 camera-hours. The following transactions occurred during the year: Film, costumes, and similar raw materials purchased on account, $185,000. Film, costumes, and other raw materials used in production, $200,000 (85% of this material was considered direct to the videos in production, and the other 15% was considered indirect). Utility costs incurred in the production studio, $72,000. Depreciation recorded on the studio, cameras, and other equipment, $84,000. 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, $130,000. Costs for salaries and wages were incurred as follows: Direct labor (actors and directors) $ 82,000 Indirect labor (carpenters to build sets, costume designers, and so forth) $ 110,000 Administrative salaries $ 95,000 Prepaid insurance expired during the year, $7,000 (80% related to production of videos, and 20% related to marketing and administrative activities). Miscellaneous marketing and administrative expenses incurred, $8,600. Studio (manufacturing) overhead was applied to videos in production. The company used 7,250 camera-hours during the year. Videos that cost $550,000 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 $925,000 and were all on account. The total cost to produce these videos according to their job cost sheets was $600,000. Collections from customers during the year totaled $850,000. Payments to suppliers on account during the year, $500,000; payments to employees for salaries and wages, $285,000. 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