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 $ 68,000 Accounts receivable 107,000 Inventories: Raw materials (film, costumes) $ 35,000 Videos in process 25,000 Finished videos awaiting sale 86,000 146,000 Prepaid insurance 10,000 Total current assets 331,000 Studio and equipment 740,000 Less accumulated depreciation 215,000 525,000 Total assets $ 856,000 Liabilities and Stockholders' Equity Accounts payable $ 156,000 Capital stock $ 425,000 Retained earnings 275,000 700,000 Total liabilities and stockholders' equity $ 856,000 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 $360,000 in manufacturing overhead for an estimated allocation base of 9,000 camera-hours. The following transactions occurred during the year: Film, costumes, and similar raw materials purchased on account, $190,000. Film, costumes, and other raw materials used in production, $205,000 (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, $77,000. Depreciation recorded on the studio, cameras, and other equipment, $89,000. 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, $135,000. Costs for salaries and wages were incurred as follows: Direct labor (actors and directors) $ 87,000 Indirect labor (carpenters to build sets, costume designers, and so forth) $ 115,000 Administrative salaries $ 100,000 Prepaid insurance expired during the year, $7,500 (80% related to production of videos, and 20% related to marketing and administrative activities). Miscellaneous marketing and administrative expenses incurred, $9,100. Studio (manufacturing) overhead was applied to videos in production. The company used 9,100 camera-hours during the year. Videos that cost $555,000 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 $935,000 and were all on account. The total cost to produce these videos according to their job cost sheets was $605,000. Collections from customers during the year totaled $855,000. Payments to suppliers on account during the year, $505,000; payments to employees for salaries and wages, $290,000. 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. 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.

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 basls of camera-hours of actlilty. The company's predetermined overhead rate for the year Is based on a cost formula that estumated $360,000 In manufacturing overhead for an estlmated allocation base of 9,000 camera-hours. The following transactlons occurred durling the year: a. Film, costumes, and simllar raw materlals purchased on account, $190,000. b. Film, costumes, and other raw materlals used in production, $205,000 (85\% of this materlal was considered direct to the videos in production, and the other 15% was considered indirect). c. Utility costs Incurred in the production studio, $77,000. d. Depreclation recorded on the studio, cameras, and other equipment, $89,000. Three-fourths of this depreclation related to production of the videos, and the remalnder related to equipment used In marketing and adminlstration. e. Advertising expense incurred on account, $135,000. f. Costs for salarles and wages were Incurred as follows: g. Prepald Insurance expired during the year, $7,500 (80\% related to production of videos, and 20% related to marketing and administratlve actlivitles). h. Miscellaneous marketing and administratlve expenses incurred, $9,100. 1. Studio (manufacturing) overhead was applled to videos in production. The company used 9,100 camera-hours durling the year. J. Videos that cost $555,000 to produce according to thelr job cost sheets were transferred to the finished videos warehouse to awalt sale and shipment. k. Sales for the year totaled $935,000 and were all on account. The total cost to produce these videos according to thelr job cost sheets was $605,000. l. Collections from customers during the year totaled $855,000. m. Payments to suppliers on account during the year, $505,000; payments to employees for salarles and wages, $290,000. 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 entrles to the letters (a) through (m) above. 3. Is the Studio (manufacturing) Overhead account underapplled 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. Is the Studia (manufscturing) Ovethesd socount underapplied or overapplied for the yese? By how much? Prepare a schedule of cost of qoods manufactured. Prepare a schedule of cost of qoods sold. Prepare an income statement far the yesr