Star Videos, Incorporated, produces short musical videos for sale to retail outlets. The company’s balance sheet accounts as of January 1 are given below. Star Videos, Incorporated Balance Sheet January 1 Assets Cash $ 84,600 Accounts receivable 103,600 Inventories: Raw materials (film, costumes) $ 52,800 Videos in process 48,000 Finished videos awaiting sale 80,200 181,000 Prepaid insurance 8,850 Studio and equipment (net) 541,000 Total assets $ 919,050 Liabilities and Stockholders’ Equity Accounts payable $ 169,000 Retained earnings 750,050 Total liabilities and stockholders’ equity $ 919,050 Because the videos differ in length and in complexity of production, the company uses a job-order costing system to determine the cost of each video produced. Studio (manufacturing) overhead is charged to videos on the basis of camera-hours of activity. The company’s predetermined overhead rate for the year ($40 per camera-hour) is based on a cost formula that estimated $280,000 in manufacturing overhead for an estimated allocation base of 7,000 camera-hours. Any underapplied or overapplied overhead is closed to cost of goods sold. The following transactions were recorded for the year: Film, costumes, and similar raw materials purchased on account, $183,000. Film, costumes, and other raw materials issued to production, $226,000 (85% of this material was considered direct to the videos in production, and the other 15% was considered indirect). Utility costs incurred (on account) in the production studio, $84,000. Depreciation recorded on the studio, cameras, and other equipment, $102,800. Three-fourths of this depreciation related to actual production of the videos, and the remainder related to equipment used in marketing and administration. Advertising expense incurred (on account), $150,500. Salaries and wages paid in cash as follows: Direct labor (actors and directors) $ 95,200 Indirect labor (carpenters to build sets, costume designers, and so forth) $ 74,500 Administrative salaries $ 110,200 Prepaid insurance expired during the year, $7,250 (70% related to production of videos, and 30% related to marketing and administrative activities). Miscellaneous marketing and administrative expenses incurred (on account), $13,950. Studio (manufacturing) overhead was applied to videos in production. The company recorded 7,250 camera-hours of activity during the year. Videos that cost $572,000 to produce according to their job cost sheets were transferred to the finished videos warehouse to await sale and shipment. Sales for the year totaled $1,032,000 and were all on account. The total cost to produce the videos that were sold according to their job cost sheets was $617,490. Collections from customers during the year totaled $982,000. Payments to suppliers on account during the year, $571,000. Underapplied or overapplied overhead $__?__. Required: 1. Prepare a transaction analysis that records all of the above transactions. 2. Prepare a schedule of cost of goods manufactured for the year & cost of goods sold for the year.. 3. Prepare an income statement for the year.

Star Videos, Incorporated, produces short musical videos for sale to retail outlets. The company’s balance sheet accounts as of January 1 are given below. Star Videos, Incorporated Balance Sheet January 1 Assets Cash $ 84,600 Accounts receivable 103,600 Inventories: Raw materials (film, costumes) $ 52,800 Videos in process 48,000 Finished videos awaiting sale 80,200 181,000 Prepaid insurance 8,850 Studio and equipment (net) 541,000 Total assets $ 919,050 Liabilities and Stockholders’ Equity Accounts payable $ 169,000 Retained earnings 750,050 Total liabilities and stockholders’ equity $ 919,050 Because the videos differ in length and in complexity of production, the company uses a job-order costing system to determine the cost of each video produced. Studio (manufacturing) overhead is charged to videos on the basis of camera-hours of activity. The company’s predetermined overhead rate for the year ($40 per camera-hour) is based on a cost formula that estimated $280,000 in manufacturing overhead for an estimated allocation base of 7,000 camera-hours. Any underapplied or overapplied overhead is closed to cost of goods sold. The following transactions were recorded for the year: Film, costumes, and similar raw materials purchased on account, $183,000. Film, costumes, and other raw materials issued to production, $226,000 (85% of this material was considered direct to the videos in production, and the other 15% was considered indirect). Utility costs incurred (on account) in the production studio, $84,000. Depreciation recorded on the studio, cameras, and other equipment, $102,800. Three-fourths of this depreciation related to actual production of the videos, and the remainder related to equipment used in marketing and administration. Advertising expense incurred (on account), $150,500. Salaries and wages paid in cash as follows: Direct labor (actors and directors) $ 95,200 Indirect labor (carpenters to build sets, costume designers, and so forth) $ 74,500 Administrative salaries $ 110,200 Prepaid insurance expired during the year, $7,250 (70% related to production of videos, and 30% related to marketing and administrative activities). Miscellaneous marketing and administrative expenses incurred (on account), $13,950. Studio (manufacturing) overhead was applied to videos in production. The company recorded 7,250 camera-hours of activity during the year. Videos that cost $572,000 to produce according to their job cost sheets were transferred to the finished videos warehouse to await sale and shipment. Sales for the year totaled $1,032,000 and were all on account. The total cost to produce the videos that were sold according to their job cost sheets was $617,490. Collections from customers during the year totaled $982,000. Payments to suppliers on account during the year, $571,000. Underapplied or overapplied overhead $?. Required: 1. Prepare a transaction analysis that records all of the above transactions. 2. Prepare a schedule of cost of goods manufactured for the year & cost of goods sold for the year.. 3. Prepare an income statement for the year.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Star Videos, Incorporated, produces short musical videos for sale to retail outlets. The company’s balance sheet accounts as of January 1 are given below.

Star Videos, Incorporated
Balance Sheet
January 1
Assets
Cash		$ 84,600
Accounts receivable		103,600
Inventories:
Raw materials (film, costumes)	$ 52,800
Videos in process	48,000
Finished videos awaiting sale	80,200	181,000
Prepaid insurance		8,850
Studio and equipment (net)		541,000
Total assets		$ 919,050
Liabilities and Stockholders’ Equity
Accounts payable		$ 169,000
Retained earnings		750,050
Total liabilities and stockholders’ equity		$ 919,050

Because the videos differ in length and in complexity of production, the company uses a job-order costing system to determine the cost of each video produced. Studio (manufacturing) overhead is charged to videos on the basis of camera-hours of activity. The company’s predetermined overhead rate for the year ($40 per camera-hour) is based on a cost formula that estimated $280,000 in manufacturing overhead for an estimated allocation base of 7,000 camera-hours. Any underapplied or overapplied overhead is closed to cost of goods sold. The following transactions were recorded for the year:

Film, costumes, and similar raw materials purchased on account, $183,000.
Film, costumes, and other raw materials issued to production, $226,000 (85% of this material was considered direct to the videos in production, and the other 15% was considered indirect).
Utility costs incurred (on account) in the production studio, $84,000.
Depreciation recorded on the studio, cameras, and other equipment, $102,800. Three-fourths of this depreciation related to actual production of the videos, and the remainder related to equipment used in marketing and administration.
Advertising expense incurred (on account), $150,500.
Salaries and wages paid in cash as follows:

Direct labor (actors and directors)	$ 95,200
Indirect labor (carpenters to build sets, costume designers, and so forth)	$ 74,500
Administrative salaries	$ 110,200

Prepaid insurance expired during the year, $7,250 (70% related to production of videos, and 30% related to marketing and administrative activities).
Miscellaneous marketing and administrative expenses incurred (on account), $13,950.
Studio (manufacturing) overhead was applied to videos in production. The company recorded 7,250 camera-hours of activity during the year.
Videos that cost $572,000 to produce according to their job cost sheets were transferred to the finished videos warehouse to await sale and shipment.
Sales for the year totaled $1,032,000 and were all on account.
The total cost to produce the videos that were sold according to their job cost sheets was $617,490.
Collections from customers during the year totaled $982,000.
Payments to suppliers on account during the year, $571,000.
Underapplied or overapplied overhead $__?__.

Required:

1. Prepare a transaction analysis that records all of the above transactions.

2. Prepare a schedule of cost of goods manufactured for the year & cost of goods sold for the year..

3. Prepare an income statement for the year.

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