Question

Problem 3-17 Cost Flows; T-Accounts; Income Statement [LO3-2, LO3-3, LO3-4] 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 Accounts receivable Inventories: s 73,000 112,000 Raw materials (film, costumes) $40,000 32,000 91,000 Videos in process Finished videos awaiting sale 163,000 11,000 359,000 Prepaid insurance Total current assets Studio and equipment 750,000 220,000 Less accumulated depreciation 530,000 Total assets $889,000 Liabilities and Stockholders' Equity Accounts pavable Capital stock Retained earnings $179,000 $430,000 280,000 710,000 Total liabilities and stockholders' equity $889,000 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 is based on a cost formula that estimated $250,000 in manufacturing overhead for an estimated allocation base of 5,000 camera-hours. The following transactions occurred during the year:

Answer 1

Cash:

Beg. bal	73,000	m.	811,000
l.	860,000
End. bal.	122,000

Accounts Receivable:

Beg. bal.	112,000	l.	860,000
k.	945,000
End. bal.	197,000

Raw Materials:

Beg. bal.	40,000	b.	210,000
a.	195,000
End bal.	25,000

Videos in Process:

Beg. bal.	32,000	j.	560,000
b.	168,000
f.	92,000
i.	350,000
End. bal.	82,000

Finished Goods:

Beg. bal.	91,000	k.	610,000
j.	560,000
End. bal.	41,000

Prepaid Insurance:

Beg. bal.	11,000	g.	8,000
End. bal.	3,000

Studio & Equipment

Beg. bal.	750,000
End. bal.	750,000

Accumulated Depreciation:

		Beg. bal.	220,000
		d.	94,000
		End. bal.	314,000

Studio Overhead:

Beg. bal.	0
b.	42,000	i.	350,000
c.	82,000
d.	70,500
f.	120,000
g.	6,000
		Bal. ( Over-applied)	29,500

Accounts Payable:

m.	510,000	Beg. bal.	179,000
		a.	195,000
		c.	82,000
		e.	140,000
		h.	9,600
		End. bal.	95,600

Salaries and Wages Payable:

m.	301,000	Beg. bal	0
		f.	317,000
		End. bal.	16,000

Sales:

		Beg. bal.	0
		k.	945,000

Cost of Goods Sold:

Beg. bal.	0
k.	610,000

Advertising Expense:

Beg. bal.	0
e.	140,000

Insurance Expense:

Beg. bal.	0
g.	2,000

Depreciation Expense:

Beg. bal.	0
d.	23,500

Administrative Salaries Expense:

Beg. bal.	0
f.	105,000

4.

Supreme Videos Inc. Schedule of Cost of Goods Manufactured
	$	$
Videos in Process, Beginning Balance		32,000
Raw Materials used in production
Raw Materials, Beginning Balance	40,000
Add: Purchases	153,000
Less: Raw Materials, Ending Balance	(25,000)	168,000
Direct Labor		92,000
Manufacturing Overhead Applied		350,000
Total Cost of Videos in Process		642,000
Less: Videos in Process, Ending Balance		(82,000)
Cost of Goods Manufactured		560,000