Question

Supreme Videos, Inc., produces short musical videos for sale to retail outlets. The company's balance sheet accounts as of January 1, are given below Supreme Videos, Inc. Balance Sheet January 1 Assets Current assets: Cash S 63,000 Accounts receivable 102,000 Inventories: Raw materials (film, costumes) $ 30,000 Videos in process 45,000 Finished videos awaiting sale 81,000 156,000 Prepaid insurance 9,000 Total current assets 330,000 studio and equipment 730,000 Les accumulated depreciation 210.000 520,000 Total assets $850,000 Liabilities and stockholders Equity Accounts payable $160,000 Capital stock $420,000 Retained earnings 270,000 690,000 Total liabilities and S850,000 stockholders equity Because the videos differ in longth 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 is based on a cost formula that estimated $280,000 in manufacturing overhead for an estimated allocation base of 7.000 camera hours. The following transactions occurred during the year

Answer 1

page-1 a Given data that Suporeme Vedios Inc poroduces shogit musical vedios to sale to retail outlets i paleparing To Accounts for each Account on the balance sheet and Entesting the entglies from(a) to (m): Cash Balance - $ 63,000 $ 185,000 i) $850,000 Balance $128,000 Accounts Receivable Balance $ 102,000 $85,000 (1) K) $425,000 Balance $144,000 Baw materials Balance $30,000 $200,000 (b) (0) $ 185,000 Bal $15,000 porepaid Industance Balance $9,000 $4,000 (9) Balance $2,000

page-2 Vedios in polocens Balance $45,000 $550,000 lj) (b) $ 190,000 (f) $82,000 o $ 290,000 Balance $ 34,000 finished Goods Balance $ 81,000 $600,000(K) j) $550,000 Balance $31,000 Studio and equipment Bal $ 130,000 Accumulated depreciation $ 210,000 Bal. $ 84,000 (d) $ 294,000 Bal. Studio oves head (6) $30,000 $ 290,000 18+ ) $ 90,000 d) $ 63,000

(f) $110,000 Page 3 (9) $ 5,600 (6) $ 9,4001 $9,400 Bal (1) I fojac {1 $280,000% $,000 Housle ya \$40 pea hous| Bightasıyow 4, a 50 houss* \ $ 40 peal housi : \ $ 290,000 Depaeciation Expense (d) $ 21,000 Insustance expense 19) $ 1,400 Advegtising Expense (e) $ 130,000 Miscellaneous Expense (h) $ 8,600 Administgative salary Expense f) $95,000 Sales $ 225,000(K) cost of goods sold

page 4 (K) $60,000 $ 9,400(0) Balance $590, 600 Accounts payable (m) $500,000 $160,000 Bal. $185,000(a) $ 42,000 (0) $ 130,000 (e) $ 89600 (1) $ 55,600 Bal Salasjies and Wages payable (m) $285,000 $285,000 (f) $ 2,000 Bal Capital stocks $ 420,000 Bal Betained fagnings $ 290,000 Bal 3) Manufact using oveshead was ovegl Applied by $ 9,400 for the yeasy.

page 5 4) Preparing and income statment for the year! Supsteme vedios, Inc. Income statment foy the yeasy ended decembest 31 Sale of vedios $ 925,000 cost of Goods sold ($600,000 - $9,400) $ 590,600 Gross Masigin $ 334,400 Selling and Administgative expenses : Depajeciation Expense $ 12,000 Advertising Expense $130,000 Administrative salosies $45,000 Insugjance expense $1,400 Miscellaneous expense $ 8,600 $ 256,000 Net opesyating Income $ 48,400