Problem $5-19$ Journal Entries; T$-$Accounts; Cost Flows $[$LO$4,$ LO$5,$ LO$7]$

Ravsten Company uses a job$-$order costing system. On January $1,$ the beginning of the current year, the company's inventory balances

were as follows:

The company applies overhead cost to jobs on the basis of machine$-$hours. For the current year, the company estimated that it would

work $36,000$ machine$-$hours and incur $$153,360$ in manufacturing overhead cost. The following transactions were recorded for the

year:

a$.$ Raw materials were purchased on account: $$200,500.$

b$.$ Raw materials were requisitioned for use in production: $$190,500(80\%$ direct and $20\%$ indirect$).$

c$.$ The following costs were incurred for employee services:

d$.$ Heat, power, and water costs were incurred in the factory: $$42,100.$

e$.$ Prepaid insurance expired during the year: $$10,100(90\%$ relates to factory operations, and $10\%$ relates to selling and administrative

activities$).$

f$.$ Advertising costs were incurred, $$50,100.$

g$.$ Depreciation was recorded for the year: $$60,100(85\%$ relates to factory operations, and $15\%$ relates to selling and administrative

activities$).$

h$.$ Manufacturing overhead cost was applied to production. The company recorded $40,000$ machine$-$hours for the year.

i$.$ Goods that cost $$481,200$ to manufacture according to their job cost sheets were transferred to the finished goods warehouse.

j$.$ Sales for the year totalled $$703,500$ and were all on account. The total cost to manufacture these goods according to their job cost

sheets was $$476,000.$ Required:

Prepare journal entries to record the transactions given above. $($Do not round intermediate calculations. If no entry is required for

a transaction$/$event$,$ select $"$No journal entry required" in the first account field.$)$

Journal entry worksheet

Raw materials were purchased on account: $$200,500.$

Note: Enter debits before credits. Prepare T$-$accounts for inventories, Manufacturing Overhead, and Cost of Goods Sold. Post relevant data from your journal entries

to these T$-$accounts $($don$\text{'}$t forget to enter the opening balances in your inventory accounts$).$ Compute an ending balance in each

account. $3-$a$.$ Is manufacturing overhead underapplied or overapplied for the year?

Underapplied overhead

Overapplied overhead

$3-$b$.$ Prepare a journal entry to properly dispose of any balance in the Manufacturing Overhead account. $($Round your percentages

and final answers to $2$ decimal places. If no entry is required for a transaction$/$event$,$ select $"$No journal entry required" in the first

account field.$)$

Journal entry worksheet

A

Record the entry to properly dispose of any balance in the Manufacturing

Overhead account.

Note: Enter debits before credits.Prepare an income statement for the year. $($Do not round intermediate calculations and round your final answers to nearest

whole dollar amount.$)$