Question

Star Videos, Inc., produces short musical videos for sale to retail outlets. The company's balance sheet accounts as of January 1 are given below. Star Videos, Inc. Balance Sheet January 1 Assets $ 81,800 Cash Accounts receivable 104,400 Inventories: $ 17,200 57,400 85,800 Raw materials (film, costumes) Videos in process 160,400 12,650 588,000 $ 947,250 Finished videos awaiting sale Prepaid insurance Studio and equipment (net) Total assets Liabilities and Stockholders' Equity Accounts payable Retained earnings Total liabilities and stockholders' equity $ 203,000 744, 250 $ 947, 250 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:

Answer 1

Solution: Part 1 Balance Sheet Income Statement Assets Liability and Equity videos in Process Manufacturin + Finished Goods + g Overhead studio and Prepaid equipment + insurance + (net) Event No. Cash + A/R +1=1 A/P + Retained Earnings Revenue - Expense = Net Income Beg. Bal. 81,800 104400 57,400 85,800 12650 588000 744,250 17,200 195500 -209500 203,000 195500 178075 31425 85800 79,500 85800 00 W - 106000 175000 -284500 1- |- 89200 26,500 175,000 112,800 2,985 10,350 82500 6965 26,500 175000 112800 2985 10350 26,500 175,000 112,800 2,985 10,350 g -9950 10350 - i=40*7250 -290000 290000 -566000 566000 1000000 1000000 1,000,000 611,070 1,000,000 611,070 -611070 611070 - -950000 950000 -556000 -556000 end bal. 191,300 + 154,400 3,200 48,675 40,730 o 2,700 482,000 = 113,650 + 3,810 -3810 809,355 1,000,000 - 934,895 = 3,810 65,105 + Sheet113 Sheet114 Sheet1 15 Sheet116 Sheet1 17 Sheet1 18 Sheet119 Sheet1 20 Sheet121 Sheet1 III - ENG US 09:07 22/01/2020

Part 2 17,200 195,500 212,700 3,200 31,425 Schedule of Cost of Goods Manufactured For Year Ended December, 31 raw material at beg add : raw material purchased Raw materials available for use Less: raw material at end Less : Indirect materials Direct raw materials used Direct labor manufacturing overhead applied Total manufacturing costs add : Work in process inventory at beg. Total work in process inventory Less: work in process inventory at end Cost of goods manufactured 178,075 89,200 290,000 557,275 57,400 614,675 48,675 566,000 3.Schedule of Cost of Goods Sold finished goodsinventory at beg add : Cost of goods manufactured Cost of goods available for sale Less : finished goods inventory at end Unadjusted Cost of goods sold Less: overapplied overhead Adjusted Cost of goods sold 85,800 566,000 651, 800 40,730 611,070 3,810 607,260 4.Income Statement For Year Ended December 31 sales Less: COGS Gross margin 1,000,000 607,260 392,740 Less: operating expenses (934895-607260) net income 327,635 65,105

wokring for part 1: Video In process МОН 209500*0.85 209500*0.15 178075 31425 d Video In process Expense 106000*3/4 106000*1/4 79,500 26,500 Video In process Expense 9950*0.7 9950*0.3 6965 2985 31425+85800+79500+82500+6965-290000 3810