The transactions in this practice set were completed by Hydro Paddle Boards, Inc. during January, the first month of the companys fiscal year. Hydro Paddle Boards, Inc. is a manufacturing corporation that designs and manufactures a limited variety of custom stand$-$up paddle $($SUP$)$ boards. The SUP boards vary in size and performance, including beginner, intermediate, advanced, competition, and racing boards.Hydro Paddle Boards, Inc. maintains a job$-$order cost system.You have accepted a position with Hydro Paddle Boards, Inc. as assistant controller, and you will begin your duties on January $1$ of the current year. In your review of the previous assistant controllers records, you notice some jobs were incomplete as of December $31$ of the previous year. These jobs are contained in the Job Cost Records. You plan to complete most of these jobs in January and to accept new jobs from dealers and other builders. You are responsible for the daily accounting operations,preparationofinterimfinancial statements, and end$-$of$-$month adjusting and closing entries.Hydro Paddle Boards, Inc. manufactures all products in a single production department. An individual job$-$order cost sheet is maintained for each job. The job$-$order cost sheet contains accumulated costs for each job, including actual direct materials, actual direct labor, and applied factory overhead.Gross pay for direct labor is recorded by a debit to Work in Process. Salaries for all other factory personnel are recorded by a debit to Factory Overhead. Salaries of non$-$factory personnel are recorded at the end of each month by a debit to the appropriate salary expense accounts. Deductions for employees FICA and federal income taxes are recorded whenever gross pay is recorded, using the simplified rates of $8\%($for FICA, including Medicare$)$ and $15\%($for federal income tax$).$ All wages are paid on the last day of the month. All employer payroll taxes are recorded at the end of the month. Payroll taxes related to factory personnel are debited to Factory Overhead. Payroll taxes related to all other company personnel are debited to Payroll Taxes ExpenseGeneral.Hydro Paddle Boards, Inc. maintains two materials accounts, one for Direct Materials and one for Indirect Materials and Factory Supplies.Factory overhead is applied to each job based on $135\%$ of direct labor cost for that job $($was $125\%$ in Dec$).$ Hydro Paddle Boards, Inc. maintains only one factory overhead account. Remember that debits to Factory Overhead represent actual overhead and credits to Factory Overhead represent applied overhead. Since the difference between actual factory overhead and appliedfactory overheadisinsignificant,the overapplied or underapplied balance is closed out to Cost of Goods Sold as an adjusting entry at the end of each month.Hydro Paddle Boards, Inc. marks up all work by $50\%$ of the job cost. Refer to the individual Job Cost Record for the total cost of the job, and multiply the total cost by $150\%$ to determine the selling price for each job.Since Hydro Paddle Boards, Inc. sells to dealers, sales are exempt from state sales tax. All sales are on account and are subject to terms of $2/10,$ net $30$ days, FOB shipping point. Sales to credit customers expected to take the discount are recorded at the discounted amount. Sales to credit customers who do not normally pay within the discount period are recorded at the gross amount. Since Hydro Paddle Boards, Inc. sells by custom order, it does not accept returns of merchandise.Accounts Payable is used solely for the purchase of direct materials and indirect materials and factory supplies. All vendors expect full payment within $30$ days. Operating expenses, with the exception of any accrued salaries, payroll taxes, property taxes, and income taxes, are paid when incurred.All cash received is deposited in the bank, and all payments are made by check.When dealing with an accounts receivable or accounts payable item, be sure to record the company name in the General Journal and post to the Accounts Receivable Ledger or Accounts Payable Ledger.It is January $1,$ and you are ready to assume your new responsibilities.Good luck! $12018$ Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Hydro Paddle Boards, Inc. MANUAL INSTRUCTIONS $1.$Journalize the entries for the month of January in the General Journal. When using the work in process account, be sure to post to the appropriate Job Cost Record. $2.$Post the General Journal entries to the General Ledger Accounts provided $($Allowance for Doubtful Accounts, Office Supplies, Factory Overhead, and Salaries Payable. $3$Journalize and post the adjusting entries$\mathrm{.}42018$ Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Hydro Paddle Boards, Inc. NARRATIVE OF TRANSACTIONS Note: Certain transactions, such as those dealing with payroll, require detailed computational work before preparing the journal entry. These transactions are explained initially in the narrative as they occur. Please refer to the original transaction when preparing a subsequent similar transaction.Jan. $2$Paid Salt Water Mall $$9,200\mathrm{.}00$ for January rent. Of this amount, $35\%$ is for office facilities and $65\%$ is for factory facilities$\mathrm{.}2$Paid RWT Advertising Agency $$1800\mathrm{.}00$ for preparingadvertisementsinlocal newspapers$\mathrm{.}3$Paid Hi$-$Foam Products Company $$16,826\mathrm{.}24$ in payment of the December $31$ balance. $3$Received a check from Calm Waters Board Corporation for the amount due $($check AR schedule$).4$Paid Marine National Bank $$47,533$ for December payroll taxes payable as follows:EmployeesIncomeTaxPayable, $$28,354$; FICA Tax Payable, $$17,929$; Federal Unemployment Tax, $$438$; State Unemployment Tax, $$812.$Applied factory overhead to Job No$.1403$ is based upon $135\%$ of direct labor cost.$($note this was $125\%$ last December but company has a new rate this year$)/$ Jan. $4$Transferred the completed job to the finished goods account. $5$SoldandshippedJobNo$\mathrm{.}1403$to