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Kelsey Equipment Inc. is headquartered in Winnipeg, Manitoba and manufactures customized equipment for the restaurant industry. Their trial balance as at July 1st, 2020, the start of their new fiscal year, is below. Cash $ 17,800 Accounts Receivable $ 35,650 Raw Materials $ 18,000 Work in Progress $ 23,375 Finished Good Inventory 37,900 Prepaid Expenses 9,950 Property and Equipment $ 475,230 Accumulated Depreciation $ 228,500 Accounts Payable $ 69,250 Employee Payroll and Wages Payable $ 15,000 Common Stock $ 270,155 Retained Earnings $ 35,000 Kelsey Equipment charges manufacturing overhead costs to each project on the basis of direct labour hours. Company management estimates that they will incur $149,000 in manufacturing overhead costs and will work 15,500 direct labour hours during the fiscal year. The following transactions took place throughout the fiscal year. Unless otherwise noted, the transactions were booked on account. 1. Raw materials consist of metal and assembly parts. A total of $750,000 were purchased on account. 2. Raw materials were issued into production in the amount of $895,000. Of this amount, $28,900 were indirect materials. 3. Accrued wages for factory staff amounted to $250,000. Of this amount, 25% was indirect Common STOCK 2/0,155 Retained Earnings 35,000 Kelsey Equipment charges manufacturing overhead costs to each project on the basis of direct labour hours. Company management estimates that they will incur $149,000 in manufacturing overhead costs and will work 15,500 direct labour hours during the fiscal year. The following transactions took place throughout the fiscal year. Unless otherwise noted, the transactions were booked on account. 1. Raw materials consist of metal and assembly parts. A total of $750,000 were purchased on account 2. Raw materials were issued into production in the amount of $895,000. Of this amount, $28,900 were indirect materials. 3. Accrued wages for factory staff amounted to $250,000. Of this amount, 25% was indirect labour. The remainder was direct labour. A total of 25,XXX direct labour hours were worked during the year. 4. Selling and administrative payroll expenses were accrued in the amount of $175,500. 5. Kelsey Equipment paid prepaid expenses of $42,000 during the year in cash. Prepaids booked to the income statement during the year were $56,000. Of this amount, $4,550 was recorded as a general and administrative expense. The difference related directly to the factory. 6. Marketing expenses for the year were $127,850. 7. Depreciation expense for the year was $45,320. 80% related to factory buildings and equipment. The remainder related to office equipment. 8. Property taxes payable on the factory were $15,300. 9. Manufacturing overhead expenses were applied to projects, 10. Projects completed during the year incurred total production costs of $1,575,400 as tracked on the job cost sheets. 11. Revenue booked on account was $2,800,650. Cost of Goods Sold were $1,790,000. 9. Manufacturing overhead expenses were applied to projects. 10. Projects completed during the year incurred total production costs of $1,575,400 as tracked on the job cost sheets. 11. Revenue booked on account was $2,800,650. Cost of Goods Sold were $1,790,000. Required: a) Prepare the journal entries for the transactions incurred throughout the fiscal year. (22 marks) b) Prepare the T-account for the Manufacturing Overhead account. (6 marks) c) Is Manufacturing Overhead overapplied or underapplied? Book the journal entry to close overapplied or underapplied Manufacturing Overhead to Cost of Goods Sold. (4 marks) d) Prepare the income statement as at June 30, 2021, assuming an income tax rate of 20%. (6 marks) Kelsey Equipment Inc. is headquartered in Winnipeg, Manitoba and manufactures customized equipment for the restaurant industry. Their trial balance as at July 1st, 2020, the start of their new fiscal year, is below. Cash $ 17,800 Accounts Receivable $ 35,650 Raw Materials $ 18,000 Work in Progress $ 23,375 Finished Good Inventory 37,900 Prepaid Expenses 9,950 Property and Equipment $ 475,230 Accumulated Depreciation $ 228,500 Accounts Payable $ 69,250 Employee Payroll and Wages Payable $ 15,000 Common Stock $ 270,155 Retained Earnings $ 35,000 Kelsey Equipment charges manufacturing overhead costs to each project on the basis of direct labour hours. Company management estimates that they will incur $149,000 in manufacturing overhead costs and will work 15,500 direct labour hours during the fiscal year. The following transactions took place throughout the fiscal year. Unless otherwise noted, the transactions were booked on account. 1. Raw materials consist of metal and assembly parts. A total of $750,000 were purchased on account. 2. Raw materials were issued into production in the amount of $895,000. Of this amount, $28,900 were indirect materials. 3. Accrued wages for factory staff amounted to $250,000. Of this amount, 25% was indirect Common STOCK 2/0,155 Retained Earnings 35,000 Kelsey Equipment charges manufacturing overhead costs to each project on the basis of direct labour hours. Company management estimates that they will incur $149,000 in manufacturing overhead costs and will work 15,500 direct labour hours during the fiscal year. The following transactions took place throughout the fiscal year. Unless otherwise noted, the transactions were booked on account. 1. Raw materials consist of metal and assembly parts. A total of $750,000 were purchased on account 2. Raw materials were issued into production in the amount of $895,000. Of this amount, $28,900 were indirect materials. 3. Accrued wages for factory staff amounted to $250,000. Of this amount, 25% was indirect labour. The remainder was direct labour. A total of 25,XXX direct labour hours were worked during the year. 4. Selling and administrative payroll expenses were accrued in the amount of $175,500. 5. Kelsey Equipment paid prepaid expenses of $42,000 during the year in cash. Prepaids booked to the income statement during the year were $56,000. Of this amount, $4,550 was recorded as a general and administrative expense. The difference related directly to the factory. 6. Marketing expenses for the year were $127,850. 7. Depreciation expense for the year was $45,320. 80% related to factory buildings and equipment. The remainder related to office equipment. 8. Property taxes payable on the factory were $15,300. 9. Manufacturing overhead expenses were applied to projects, 10. Projects completed during the year incurred total production costs of $1,575,400 as tracked on the job cost sheets. 11. Revenue booked on account was $2,800,650. Cost of Goods Sold were $1,790,000. 9. Manufacturing overhead expenses were applied to projects. 10. Projects completed during the year incurred total production costs of $1,575,400 as tracked on the job cost sheets. 11. Revenue booked on account was $2,800,650. Cost of Goods Sold were $1,790,000. Required: a) Prepare the journal entries for the transactions incurred throughout the fiscal year. (22 marks) b) Prepare the T-account for the Manufacturing Overhead account. (6 marks) c) Is Manufacturing Overhead overapplied or underapplied? Book the journal entry to close overapplied or underapplied Manufacturing Overhead to Cost of Goods Sold. (4 marks) d) Prepare the income statement as at June 30, 2021, assuming an income tax rate of 20%. (6 marks)