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., 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 Cash Accounts receivable Inventories: $82,600 97,600 Raw materials (film, costumes) $42,800 56,600 79,800 Videos in process 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 179,200 10,050 548,000 $ 917,450 $188,000 729,450 $ 917,450 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 studio and videos in Manufacturin Prepaid equipment + Raw Materials + Process 1+ Finished Goods + lg Overhead [+ insurance |+|(net) 1+1= A/P Event No.Cash + A/R + Retained Earnings Revenue - Expense = Net Income Beg. Bal. 82,600 97600 56,600 79,800 10050 548000 729,450 42,800 221000 -259000 188,000 221000 220150 38850 81200 69,900 81200 -93200 161000 - -291700 98200 83500 6370 23,300 161,000 110,000 2,730 14,150 23,300 - 1610001 - 1100001 - 2730 14150 - 23,300 161,000 110,000 2,730 14,150 -9100 141501 i=40*7250 -290000 290000 -580000 580000 1100000 1100000 SEX 1,100,000 626,050 1,100,000 626,050 -626050 626050 - -1050000 1050000 -529000 -529000 end bal. 311,900 + 147,600 4,800 84,950 3 3,750 | 10180 0 950 454,800 = 136,350 + 10,180 -10180 902,400 1,100,000 - 927,050 = 10,180 172,950 N _Sheet418 Sheet419 Sheet420 Sheet421 Sheet422 Sheet423S heet4 24 Sheet425 Sheet426 III e 9 0 9 Jul 10 EN ENG UK 19:46 29/09/2019

Part 2 42,800 221,000 263,800 4,800 38,850 4.Income Statement For Year Ended December 31 sales Less: COGS Gross margin Less: operating expenses (927050-615870) net income 1,100,000 626,050 473,950 311,180 162,770 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 220,150 98,200 290,000 608,350 56,600 664,950 84,950 580,000 3.Schedule of Cost of Goods Sold finished goods inventory 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 79,800 580,000 659,800 33,750 626,050 - 10,180 615,870

wokring for part 1: Video In process MOH 259000*0.85 259000*0.15 220150 38850 Video In process Expense 81200*3/4 81200*1/4 60900 20300 Video In process Expense 9100*0.7 9100*0.30 2730 38850+81200+69900+83500+63 70-290000 -10180