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. $ 83,000 122,000 Supreme Videos, Incorporated Balance Sheet January 1 Assets Current assets: Cash Accounts receivable Inventories: Raw materials (film, costumes) $ 50,000 Videos in process 23,000 Finished videos awaiting sale 101,000 Prepaid insurance Total current assets Studio and equipment 770,000 Less accumulated depreciation 230,000 174,000 13,000 392,000 540,000 $ 932,000 Total assets $ 133,000 Liabilities and Stockholders' Equity Accounts payable Capital stock Retained earnings Total liabilities and stockholders' equity $ 509,000 290,000 799,000 $ 932,000 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 $240,000 in manufacturing overhead for an estimated allocation base of 6,000 camera-hours. The following transactions occurred during the year: a. Film, costumes, and similar raw materials purchased on account, $205,000. b. Film, costumes, and other raw materials used in production, $220,000 (80% of this material was considered direct to the videos in production, and the other 20% was considered indirect), c. Utility costs incurred in the production studio, $92,000. d. Depreciation recorded on the studio, cameras, and other equipment, $104,000. 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, $150,000. f. Costs for salaries and wages were incurred as follows: $ 102,000 Direct labor (actors and directors) Indirect labor (carpenters to build sets, costume designers, and so forth) Administrative salaries $ 130,000 $ 115,000 g. Prepaid insurance expired during the year, $9,000 (75% related to production of videos, and 25% related to marketing and administrative activities). h. Miscellaneous marketing and administrative expenses incurred, $10,600. i. Studio (manufacturing) overhead was applied to videos in production. The company used 9,000 camera-hours during the year. j. Videos that cost $570,000 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 $965,000 and were all on account. The total cost to produce these videos according to their job cost sheets was $620,000. 1. Collections from customers during the year totaled $870,000. m. Payments to suppliers on account during the year, $520,000; payments to employees for salaries and wages, $327,000. 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. 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. Complete this question by entering your answers in the tabs below. Reg 1 and 2 Reg 3 Reg 4 Reg 5 Reg Prepare a T-account for each account on the company's balance sheet and enter the beginning balances. Record the transactions directly into the T-accounts. Cash Accounts Receivable Credit Credit Debit Beginning Balance 83,000 Debit Beginning Balance 122,000 Ending Balance 83,000 Ending Balance 122,000 Raw Materials Prepaid Insurance Credit Credit Debit Beginning Balance Debit Beginning Balance 50,000 13,000 Ending Balance 50,000 Ending Balance 13,000 Videos in Process Finished Goods Credit Credit Debit Beginning Balance Debit Beginning Balance 23,000 101,000 Ending Balance 101,000 Ending Balance 23,000 Studio and Equipment Credit Debit Beginning Balance Accumulated Depreciation Debit Credit Beginning Balance 230,000 770,000 Ending Balance 230,000 Ending Balance 770,000 Studio Overhead Depreciation Expense Credit Credit Debit Beginning Balance b. . Debit Beginning Balance d. . 360,000 26,000 c. 44,000 92,000 78,000 130,000 6,750 Ending Balance d. . T. 26,000 g g Ending Balance 9,250 Insurance Expense Advertising Expense Credit Credit Debit Beginning Balance g. . Debit Beginning Balance 2.250 e. 150,000 Ending Balance 2,250 Ending Balance 150,000 Miscellaneous Expense Credit Debit Beginning Balance h. Administrative Salaries Expense Debit Credit Beginning Balance 115,000 10,600 Ending Balance 10,600 Ending Balance 115,000 Cost of Goods Sold Sales Credit Credit Debit Beginning Balance k. Debit Beginning Balance 620,000 965,000 K. Ending Balance 620,000 Ending Balance 965,000 Accounts Payable Credit Salaries & Wages Payable Debit Credit Beginning Balance . m. 327,000 347,000 1. Debit Beginning Balance m. 520,000 133,000 205,000 a. 92,000 C. 150,000 e. 10,600 h. Ending Balance 20,000 Ending Balance 70,600 Retained Earnings Capital Stock Debit Beginning Balance Credit 290,000 Debit Beginning Balance Credit 509,000 Ending Balance 290,000 Ending Balance 509,000