(Solved Homework): 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 Video…

Star Videos, Inc., produces short musical videos for sale to retail outlets. The companys balance sheet accounts as of January 1 are given below Star Videos, Inc. Balance Sheet January1 AssetsS Cash Accounts receivable Inventories: $ 82,600 104,400 Raw materials (film, costumes) $47,600 49,600 96,200 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 193,400 10,900 534,000 $925,300 162,000 763,300 $925,300 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 companys 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:

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 January1 AssetsS Cash Accounts receivable Inventories: $ 82,600 104,400 Raw materials (film, costumes) $47,600 49,600 96,200 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 193,400 10,900 534,000 $925,300 162,000 763,300 $925,300 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:

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Req 1: TRANSACTION ANALYSIS
NO. PARTICULARS CASH A/C REC. RAW MAT. IN PROCESS FIN. GOODS MFG OH PREPAID INS. EQUIPMENT     = A/C PAY. RE
Beginning balance 82600 104400 47600 49600 96200 10900 534000 162000 763300
a. Raw material purchased 191000 191000
b. Raw material consumed -229000 194,650 34350
c. Utility cost incurred 78000 78000
d. Depreciation on equipment 73500 -98000 -24500
e. Advertisement incurred 179500 -179500
f. Salaries and wages paid -282300 98800 88500 -95000
g Prepaid inssurance expired 6580 -9400 -2820
h. Misc marketing and admin expense 12100 -12100
i. manufacturing OH applied 290000 -290000
j. Cost of goods manufactured -538000 538000
k. Sales on account 1018000 1018000
l. Cost of goods sold -581110 -581110
m. Cash collections 968000 -968000
n. payment to suppliers -600000 -600000
o. Overe-applied OH 9070 9070
TOTAL Ending balance 168300 154400 9600 95050 53090 0 1500 436000 22600 895340
Note: All expense related to Marketing, Selling, advertiement and Admin will be directly to Income Statement. Hence, treated in Retained earnings
Note: OH applied:
Camera hours worked 7250
Pre-determined Overheads 40
OH absorbed 290000
Total OH incurred 280930
(34350+78000+73500+88500+6580)
Over-applied OH 9070
Req2:
SCHEDULE OF COST OF GOODS MANUFACTURED FOR STAR VIDEOS INC.
PARTICULARS AMOUNT IN $
Beginning Inventory of raw material 47600
Add: Purchases 191000
Less: Ending Inventory 9600
Raw material Consumed 229000
Less: Indirect material consumed 34350
Direct material consumed 194,650
Direct wages incurred 98,800
Manufacturing OH applied(7250 hours @40) 290,000
Total Manufacturing cost 583,450
Add: Beginning Balance of Work in process 49,600
Less: Ending Balance of Work in process 95,050
COST OF GOODS MANUFACTURED 538,000
Req 3:
SCHEDULE OF COST OFGOODS SOLD FOR STAR VIDEOS INC.
PARTICULARS AMOUNT IN $
Cost of Goods manufactured (as computed above) 538,000
Add: Beginning inventory balance of Finished Goods 96,200
Cost of Goods available for sale 634,200
Less: Ending Inventory of Finished Goods 53,090
Cost of Goods to be sold 581,110
Less: Over-applied OH 9,070
ADJUSTED COST OF GOODS SOLD 572,040
Req 4:
STATEMENT OF INCOME
PARTICULARS AMOUNT IN $
Sales Revenue 1,018,000
Less: Cost of Good sold (as computed above) 572,040
Gross Margin 445,960
Less: Expenses
Depreciation on Equipment 24500
Advertisement 179500
Admin salaries 95000
Insurance Expense 2820
Misc Marketing and admin expense 12100 313,920
Net Income earned during the period 132,040

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