Problem 3-16 (Static) Comprehensive Problem [LO3-1, LO3-2, LO3-4] Gold Nest Campany of Guandong, Chino, is a family-owned enterprise that makes birdcages for the South China market. The company bells its birdcages through an extensive network of street vendors who recelve commissions on their sales The campany uses a job-order costing system in which overhead is applied to jobs on the basis of direct labor cost. Its predetermined ovethead rate is bosed on a cost formulo thot estimated $330,000 of manufacturing overheod for an estimoted activity level of $200,000 direct labor dollars. At the beqinning of the year, the inventory balances were as follows During the year, the following transactons were completed: a. Raw materials purchated on account, $275.000 b. Raw materials used in production, $280.000 (materials costing $220,000 were charged directly to jobs, the remaining materiais were indirect). c. Costs for employee setvices were incurred as follows d. Rent for the year was $18,000 i $13,000 of this amount related to factory operations, and the remainder related to selling and administrative octivities) e. Utity costs incurred in the factory, $57,000 1. Adventising costs incurred, $140.000 9. Depreciovion recorded on equipment, $100,000. $88,000 of this amount related to equipment used in factory ogerotions, the remaining $12.000 reloted to equipment used in selling and adminisative octivites) h. Manufoctuting overhesd cost was applied to jobs, 5 L. Goods that had cost $675,000 to manufocture occording to their job cost sheets were completed. 1. Sales for the year (all paid in cash) totaled $1,250,000. The total cost to manufacture these goods according to their job cost sheets wos 5700,000 Required: 1. Prepare joumal entries to record the transactions for the year. 2. Prepore T-occounts for each inventory occount, Manufacturing Overheod, and Cast of Goods Sold Post relevant data from your journal entries to these Traccounts (don't forget to enter the beginning balances in your inventory accounts) 3A. Is Manufacturing Overtieod underapplied or overapplied for the year? 38. Prepare a journal entry to close any balance in the Manufacturing Overheod account to Cost of Goods Sold. 4. Prepore on income storement for the yoar. (All of the informotion needed for the income starement is avalable in the journal entries and T-accounts you have prepared) Required: 1. Prepare journal entries to record the transactions for the year. 2. Prepare T-accounts for each inventory account, Manufacturing Overhead, and Cost of Goods Sold. Post relevant data from your joumal entries to these T-accounts (don't forget to enter the beginning balances in your inventory accounts). 3A. Is Manufacturing Overhead underapplied or overapplied for the year? 3B. Prepare a journal entry to close any balance in the Manufacturing Overhead account to Cost of Goods Sold. 4. Prepare an income statement for the year. (All of the information needed for the income statement is available in the journal entries ond T-accounts you have prepared.) Complete this question by entering your answers in the tabs below. Prepare joumal entries to record the transactions for the year. (If no entry is required for a transaction/event, select "o journal entry required in the first account field.) Journal entry worksheet and haccouns you have pelswied) Fotculete this asestion try niseriate vour answers in the tabs below. 4. Prepare an income statement for the year. (All of the information needed for the incom and T-accounts you have prepared.) Complete this question by entering your answers in the tabs below. Is Manufacturing Overhead underapplied or overapplied for the year? Prepare a journal entry to dose any balance in the Manufacturing Overhead account to Cost of Goods Sold. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Journal entry worksheet Record the entry to close any balance in the Manufacturing Overhead account to Cost of Goods Sold. Note: Enter debits before credits. Prepare an income statement for the year. (All of the information needed for the income statement is avantable in the jouma entries and T-accounts you have prepared.)