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.

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 $$250,000$ in manufacturing overhead for an estimated allocation base of $5,000$ camera$-$hours. The following transactions occurred during the year:

a$.$ Film, costumes, and similar raw materials purchased on account, $$195,000.$

b$.$ Film, costumes, and other raw materials used in production, $$210,000(80\%$ of this material was considered direct to the videos inSupreme 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, IncorporatedBalance SheetJanuary $1$AssetsCurrent

assets:

Cash $ $73,000$

Accounts receivable $ $112,000$

Inventories:

Raw materials $($film$,$ costumes$)$ $$40,000$Videos in process $$32,00$

Finished videos awaiting sale $$91,000/163,000$

Prepaid insurance $$11,000$

Total current assets $$359,000$

Studio and equipment $$750,000$

Less accumulated depreciation $220,000/$ $$530,00$

Total assets $$889,000$

Liabilities and Stockholders' Equity

Accounts payable $$179,000$

Capital stock $$430,000$

Retained earnings $$280,000/$ $$710,000$

Total liabilities and stockholders equity $$889,000$

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 company's predetermined overhead rate for the year is based on a cost formula that estimated $$250,000$ in manufacturing overhead for an estimated allocation base of $5,000$ camera$-$hours. The following transactions occurred during the year:

A$.$ Film, costumes, and similar raw materials purchased on account, $$195,000.$B$.$Film, costumes, and other raw materials used in production, $$210,000(80\%$ of this material was considered direct to the videos i production, and the other $20\%$ was considered indirect$).$

C$.$ Utility costs incurred in the production studio, $$82,000.$

D$.$ Depreciation recorded on the studio, cameras, and other equipment, $$94,000.$ 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, $$140,000.$

F$.$ Costs for salaries and wages were incurred as follows:

Direct labor $($actors and directors$)$ $$92,000$

Indirect labor $($carpenters to build sets,costume designers, and so forth$)$ $$120,000$

Administrative salaries $$105,000$

G$.$ Prepaid insurance expired during the year, $$8,000(75\%$ related to production of videos, and $25\%$ related to

marketing and administrative activities$).$

H$.$Miscellaneous marketing and administrative expenses incurred, $$9,600.$

I. Studio $($manufacturing$)$ overhead was applied to videos in production. The company used $7,000$ camera$-$hours during the year.

J$.$ Videos that cost $$560,000$ 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 $$945,000$ and were all on account. The total cost to produce these videos according to their job cost sheets was $$610,000.$

L$.$ Collections from customers during the year totaled $$860,000$

M$.$ Payments to suppliers on account during the year, $$510,000$; payments to employees for salaries and wages, $$301,000.$

Required and important:

$1.$ 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.