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 $378,000 of manufacturing overhead for an estimated allocation base of 900 direct labor-hours. The following transactions took place during the year:   Raw materials purchased on account, $285,000. Raw materials used in production (all direct materials), $270,000. Utility bills incurred on account, $76,000 (85% related to factory operations, and the remainder related to selling and administrative activities). Accrued salary and wage costs:   Direct labor (950 hours) $ 315,000 Indirect labor $ 107,000 Selling and administrative salaries $ 195,000   Maintenance costs incurred on account in the factory, $71,000 Advertising costs incurred on account, $153,000. Depreciation was recorded for the year, $89,000 (70% related to factory equipment, and the remainder related to selling and administrative equipment). Rental cost incurred on account, $114,000 (75% 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, $940,000. Sales for the year (all on account) totaled $2,050,000. These goods cost $970,000 according to their job cost sheets.   The balances in the inventory accounts at the beginning of the year were:   Raw Materials $ 47,000 Work in Process $ 38,000 Finished Goods $ 77,000   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 for the year.

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 $378,000 of manufacturing overhead for an estimated allocation base of 900 direct labor-hours. The following transactions took place during the year:

1. Raw materials purchased on account, $285,000.
2. Raw materials used in production (all direct materials), $270,000.
3. Utility bills incurred on account, $76,000 (85% related to factory operations, and the remainder related to selling and administrative activities).
4. Accrued salary and wage costs:

1. Maintenance costs incurred on account in the factory, $71,000
2. Advertising costs incurred on account, $153,000.
3. Depreciation was recorded for the year, $89,000 (70% related to factory equipment, and the remainder related to selling and administrative equipment).
4. Rental cost incurred on account, $114,000 (75% related to factory facilities, and the remainder related to selling and administrative facilities).
5. Manufacturing overhead cost was applied to jobs, $ ? .
6. Cost of goods manufactured for the year, $940,000.
7. Sales for the year (all on account) totaled $2,050,000. These goods cost $970,000 according to their job cost sheets.

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

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 for the year.