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. $ 78,000 117,000 Supreme Videos, Inc. Balance Sheet January 1 Assets Current assets: Cash Accounts receivable Inventories: Raw materials (film, costumes) $ 45,000 Videos in process 23,000 Finished videos awaiting wale 96,000 Prepaid insurance Total current assets Studio and equipment 760,000 Less accumulated depreciation 225,000 Total assets Liabilities and Stockholders' Equity Accounts payable Capital stock $504,000 Retained earnings 285,000 Total liabilities and stockholders' equity 164,000 12,000 371,000 535,000 $906,000 $117,000 789,000 $906,000

Answer 1

Solution ;

                Cash a/c

Dr                                                 Cr

Particulares     Amount      Particulares   Amount

Bal b/d             78000         Suppliers      515000

A/R                 865000        Salaries        322000

                                        Balance c/d     106000

                       943000                         943000

                       Accounts receivable

Dr                                              Cr

Particulars       Amount         Particulars    Amount

Balance b/d      117000           Cash          865000

Sales 955000

                                         Balance c/d      207000

1072000    1072000           

   Raw material

Dr    Cr

Particulars           Amount    Particulars Amount

Balance b/d    45000

Accounts payable    200,000    Balance c/d    245000

245000    245000

Prepaid insurance

Dr Cr

Particular    Amount    Particular    Amount

Balance b/d 12000    Prepaid insurance expired    8500       

Balance c/d 3500

12000 12000

Video in process

Dr Cr

Particular                                Amount Particular    Amount

Balance b/d    23000       Finished goods    565000

Production    215000

Direct labor    97000       Balance c/d        121000

Studio O.H ( 45*7800 )    351000    

                                                     686000                                  686000

                                 Finished goods

Dr                                                    Cr

Particular      Amount         Particular     Amount

Balance b/d 96000

Video in process   565000        Balance c/d    661000

                           661000                               661000

                          Studios and equipment

Dr                                                 Cr

Particular             Amount       Particular       Amount

Balance b/d          760000

                                            Balance cld       760000

                           760000                               760000

                          Accumulated depreciation

Dr                                               Cr

Particular           Amount       Particular   Amount

                                          Balance b/d   225000

Balance c/d 324000 Depreciation on studio and camera      99000

                         324000                                                              324000

                                        Studio O.H

Dr                                                       Cr

Particular            Amount       Particular     Amount

Direct video in production     172000        Video in process      351000

   Utility cost                          87000        Cost of goods sold

Depreciation                            74250       ( Balance c/d    )       107250

Salaries and wage payable       125000

                                                458250                                  458250

                                    Advertising expense

Particular         Amount          Particular      Amount

Accounts payable   145000

                                              Balance c/d       145000

                              145000                              145000

                              Administative salaries expense

Particular          Amount       Particular        Amount

Accounts payable                110000

                                                              Balance c/d      110000

                                              110000                              110000

                             Cost of Goods sold

Dr                                                           Cr

Particular            Amount        Particular        Amount

Job cost          615000          Studio O.H       107250

                                           Balance c/d      507750

                      615000                                   615000

                             Salaries and wages payable

Dr                                           Cr

Particular          Amount     Particular        Amount

Cash             322000          Direct labour    97000

           Indirect labor    125000

Balance c/d 10000      Administrative    110000

332000 332000              

   Retained earnings

Particular    Amount    Particular    Amount

Balance b/d 285000

Balance c/d    285000

285000    285000

Depreciation

Particular Amount    Particular    Amount

   Equipments 24750

Balance c/d    24750

24750    24750

Insurance

Particular Amount    Particular Amount

Marketing and administative (8500*1/4)      2125

Balance c/d        2125

                          2125                                                                     2125

                           Miscellaneous expense

Particular        Amount       Particular        Amount

Accounts payable                     10100

                                                                 Balance c/d       10100

                                                10100                                  10100

                                      Sales a/c

Particular                 Amount               Particular         Amount

                                                 Accounts receivable   955000

Balance c/d             955000

                                955000                                          955000

                        Accounts payable a/c

Particular         Amount         Particular       Amount

Cash    515000           Balance b/d              117000

                                           Raw material 200000

                                           Utility cost        87000

Balance c/d    44100       Advertising expense     145000

                                          Miscellous expense       10100

                          559100                                         559100

                                    Capital stock

Particular          Amount       Particular       Amount

                                        Balance b/d     504000

Balance c/d        504000

                        504000                               504000

Predetermind overhead rate = 270000 / 6000 = 45 per camera hr

Is studio ( manufacturing ) overhead amount under applied or over applied for the year

Over applied by   107250 for the year

                                          Supreme vidos Inc

                                   Income statement

Sales		955000
Less . Cost of goods sold		(507750)
Gross profit		447250
Less. Selling and administration expense
Depreciation expense	24750
Advertising expense	145000
Administrative salaries	110000
Insurance expense	2125
Miscellaneous expense	10100	(291975)
Net operating income		155275