Problem $3-15($Static$)$ Journal Entries; T$-$Accounts; Financial Statements $[$LO$3-1,$ LO$3-2,$ LO$3-3,$ LO$3-4]$

Froya Fabrikker A$/$S of Bergen, Norway, is a small company that manufactures specialty heavy equipment for use in North Sea oil fields. The company uses a job$-$order costing system that applies manufacturing overhead cost to jobs on the basis of direct labor$-$hours. Its predetermined overhead rate was based on a cost formula that estimated $$360,000$ of manufacturing overhead for an estimated allocation base of $900$ direct labor$-$hours. The following transactions took place during the year:

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Raw materials purchased on account, $$200,000.$

Raw materials used in production $($all direct materials$),$ $$185,000.$

Utility bills incurred on account, $$70,000(90\%$ related to factory operations, and the remainder related to selling and administrative activities$).$

Accrued salary and wage costs:

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Direct labor $(975$ hours$)$$ $230,000$Indirect labor$ $90,000$Selling and administrative salaries$ $110,000$

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Maintenance costs incurred on account in the factory, $$54,000.$

Advertising costs incurred on account, $$136,000.$

Depreciation was recorded for the year, $$95,000(80\%$ related to factory equipment, and the remainder related to selling and administrative equipment$).$

Rental cost incurred on account, $$120,000(85\%$ related to factory facilities, and the remainder related to selling and administrative facilities$).$

Manufacturing overhead cost was applied to jobs, $$?.$

Cost of goods manufactured for the year, $$770,000.$

Sales for the year $($all on account$)$ totaled $$1,200,000.$ These goods cost $$800,000$ according to their job cost sheets.

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The balances in the inventory accounts at the beginning of the year were:

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Raw Materials$ $30,000$Work in Process$ $21,000$Finished Goods$ $60,000$

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Required:

$1.$ Prepare journal entries to record the preceding transactions.

$2.$ Post your entries to T$-$accounts. $($Don$$t forget to enter the beginning inventory balances above.$)$

$3.$ Prepare a schedule of cost of goods manufactured.

$4$A$.$ Prepare a journal entry to close any balance in the Manufacturing Overhead account to Cost of Goods Sold.

$4$B$.$ Prepare a schedule of cost of goods sold.

$5.$ Prepare an income statement for the year.