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 $ $84,000$

Accounts receivable $123,000$

Inventories:

Raw materials $($film$,$ costumes$)$ $ $51,000$

Videos in process $20,000$

Finished videos awaiting sale $102,000173,000$

Prepaid insurance $13,200$

Total current assets $393,200$

Studio and equipment $772,000$

Less accumulated depreciation $231,000541,000$

Total assets $ $934,200$

Liabilities and Stockholders' Equity

Accounts payable $ $133,200$

Capital stock $ $510,000$

Retained earnings $291,000801,000$

Total liabilities and stockholders' equity $ $934,200$

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$$s predetermined overhead rate for the year is based on a cost formula that estimated $$225,000$ 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, $$206,000.$

Film, costumes, and other raw materials used in production, $$221,000(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, $$93,000.$

Depreciation recorded on the studio, cameras, and other equipment, $$105,000.$ 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, $$151,000.$

Costs for salaries and wages were incurred as follows:

Direct labor $($actors and directors$)$ $ $103,000$

Indirect labor $($carpenters to build sets,

costume designers, and so forth$)$ $ $131,000$

Administrative salaries $ $116,000$

Prepaid insurance expired during the year, $$9,100(80\%$ related to production of videos, and $20\%$ related to marketing and administrative activities$).$

Miscellaneous marketing and administrative expenses incurred, $$10,700.$

Studio $($manufacturing$)$ overhead was applied to videos in production. The company used $8,000$ camera$-$hours during the year.

Videos that cost $$571,000$ 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 $$967,000$ and were all on account. The total cost to produce these videos according to their job cost sheets was $$621,000.$

Collections from customers during the year totaled $$871,000.$

Payments to suppliers on account during the year, $$521,000$; payments to employees for salaries and wages, $$328,000.$

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.