12 Froya Fabrikker A/S of Bergen, Norway, manufactures specialty heavy equipment for use in North Sea oil fields. The company uses ajob-order costing system that applies manufacturing overhead cost to jobs based on direct labor-hours. Its predetermined overheadrate was based on a cost formula that estimated $378,000 of manufacturing overhead for an estimated allocation base of 900 directlabor-hours. The following transactions occurred during the year:a. Raw materials purchased on account, $285,000.b. Raw materials used in production (all direct materials), $270,000.c. Utility bills incurred on account, $76,000 (85% related to factory operations, and the remainder related to selling and administrativeactivities).d. Accrued salary and wage costs:Direct labor (950 hours)Indirect laborSelling and administrative salaries.e. Maintenance costs incurred on account in the factory, $71,000f. Advertising costs incurred on account, $153,000.g. Depreciation recorded for the year, $89,000 (70% related to factory equipment, and the remainder related to selling andadministrative equipment).$ 315,000$ 107,000$ 195,000h. Rental cost incurred on account, $114,000 (75% related to factory facilities, and the remainder related to selling and administrativefacilities).i. Manufacturing overhead cost applied to jobs, $?.j. Cost of goods manufactured, $940,000.k. Sales for the year (all on account) totaled $2,050,000. These goods cost $970,000 according to their job cost sheets.The beginning balances in the inventory accounts were:Raw Materials.Work in ProcessFinished Goods$ 47,000$ 38,000$ 77,000Required: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.4A. Prepare a journal entry to close any balance in the Manufacturing Overhead account to Cost of Goods Sold.4B. Prepare a schedule of cost of goods sold.5. Prepare an income statement.

Transaction / EventAccount TitlesDebit($)Credit($)1.Raw Materials Inventory285,000Accounts…

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. 4A. Prepare a journal entry to close any balance in the Manufacturing Overhead account to Cost of Goods Sold. 4B. Prepare a schedule of cost of goods sold. 5. Prepare an income statement.

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. 4A. Prepare a journal entry to close any balance in the Manufacturing Overhead account to Cost of Goods Sold. 4B. Prepare a schedule of cost of goods sold. 5. Prepare an income statement.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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