The subsidiary ledgers for work in process are as follows:

Overhead is applied on the basis of direct labor hours $($dlh$).$ Estimated annual overhead is $$25,000,$ whereas

estimated annual direct labor hours were $500dlh.$

During January, two additional pieces of jewelry, a brooch $($job $13)$ and earrings $($job $14),$ were started.

Other items of importance are:

$$47,000$ of gemstones and gold were purchased on account.

Gemstones and gold were requisitioned for each job as follows; $10-$$$7,000,11-$$$1,000\mathrm{.}12-$$$4,000,13$

$-$$$5,000,14-$$$2,000.$

Indirect materials of $$450$ were requisitioned for use in jewelry manufacturing.

Direct labor was incurred in January on the basis of $$60$ per hour and was paid in cash; hours used were

$10-14$ dlh$,11-20dlh,12-10dlh,13-22dlh,14-7dlh.$

The jewelry manufacturing floor supervisor salary was $$4,000$ and was paid in cash in January.

Overhead is applied to production on the basis of direct labor hours.

General administrative expenses for the month were $$9,500,$ paid in cash.

The earrings, ring, and necklace were finished.

The earrings and ring were sold for $$18,000$ in cash, and $$43,000$ on account, respectively.

REQUIRED:

Prepare the Clares Inc. Balance Sheet for January $1($just fill in the WIP balance and Retained Earnings

above and show that Total Assets equals in this case Total Equity. Do not rewrite out the Balance Sheet$).$

Prepare job cost sheets for all jobs.

Prepare all journal entries and record in T$-$accounts for the information above.

Prepare cost of goods manufactured statement for January.

Prepare the cost of goods sold statement for January.

Close the over$-$under applied overhead to the cost of goods sold for January.

Prepare the Clares Inc. Income Statement for January.

NOW: Assume that the over or under applied overhead is MATERIAL. Prorate the balance to the

appropriate accounts.