Answered You can hire a professional tutor to get the answer.
Supreme Videos, Inc., produces short musical videos for sale to retail outlets. The company's balance sheet accounts as of January 1, the beginning...
"Supreme Videos, Inc., produces short musical videos for sale to retail outlets. The company’s balancesheet accounts as of January 1, the beginning of its fiscal year, are given below.SUPREME VIDEOS, INC.Balance SheetJanuary 1AssetsCurrent assets:Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 63,000Accounts receivable . . . . . . . . . . . . . . . . . . . . 102,000Inventories:Raw materials (film, costumes) . . . . . . . . . $ 30,000Videos in process . . . . . . . . . . . . . . . . . . . . 45,000Finished videos awaiting sale . . . . . . . . . . . 81,000 156,000Prepaid insurance . . . . . . . . . . . . . . . . . . . . . 9,000Total current assets . . . . . . . . . . . . . . . . . . . . . . 330,000Studio and equipment . . . . . . . . . . . . . . . . . . . . 730,000Less accumulated depreciation . . . . . . . . . . . . . 210,000 520,000Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . $850,000Liabilities and Shareholders’ EquityAccounts payable . . . . . . . . . . . . . . . . . . . . . . . . $160,000Capital stock . . . . . . . . . . . . . . . . . . . . . . . . . . . $420,000Retained earnings . . . . . . . . . . . . . . . . . . . . . . . 270,000 690,000Total liabilities and shareholders’ equity . . . . . . . $850,000Since the videos differ in length and in complexity of production, the company uses a jobordercosting system to determine the cost of each video produced. Studio (manufacturing) over-120 Chapter 3 Systems Design: Job-Order Costingwww.mcgrawhill.ca/college/garrisonSChapter 3 Systems Design: Job-Order Costing 121head is charged to videos on the basis of camera-hours of activity. At the beginning of the year, thecompany estimated that it would work 7,000 camera-hours and incur $280,000 in studio overheadcost. The following transactions were recorded for the year:a. Film, costumes, and similar raw materials purchased on account, $185,000.b. Film, costumes, and other raw materials issued to production, $200,000 (85% of this materialwas considered direct to the videos in production, and the other 15% was considered indirect).c. Utility costs incurred in the production studio, $72,000.d. Depreciation recorded on the studio, cameras, and other equipment, $84,000. Three-fourths ofthis depreciation related to actual production of the videos, and the remainder related to equipmentused in marketing and administration.e. Advertising expense incurred, $130,000.f. Costs for salaries and wages were incurred as follows:Direct labour (actors and directors) . . . . . . . . . . . . $82,000Indirect labour (carpenters to build sets,costume designers, and so forth) . . . . . . . . . . . . $110,000Administrative salaries . . . . . . . . . . . . . . . . . . . . . . $95,000g. Prepaid insurance expired during the year, $7,000 (80% related to production of videos, and20% related to marketing and administrative activities).h. Miscellaneous marketing and administrative expenses incurred, $8,600.i. Studio (manufacturing) overhead was applied to videos in production. The company recorded7,250 camera-hours of activity during the year.j. Videos that cost $550,000 to produce according to their job cost sheets were transferred to thefinished videos warehouse to await sale and shipment.k. Sales for the year totalled $925,000 and were all on account. The total cost to produce thesevideos according to their job cost sheets was $600,000.l. Collections from customers during the year totalled $850,000.m. Payments to suppliers on account during the year, $500,000; payments to employees forsalaries and wages, $285,000.Required:1. Prepare a T-account for each account on the company’s balance sheet and enter the beginningbalances.2. Record the transactions directly into the T-accounts. Prepare new T-accounts as needed. Keyyour entries to the letters (a) through (m) above. Find the ending balance in each account.3. Is the Studio (manufacturing) Overhead account underapplied or overapplied for the year?Make an entry in the T-accounts to close any balance in the Studio Overhead account to Costof Goods Sold.4. Prepare an income statement for the year. (Do not prepare a schedule of cost of goods manufactured;all of the information needed for the income statement is available in the T-accounts.)"
