Supreme Videos, Inc., produces short musical videos for sale to retail outlets. The company’s balance sheet accounts as of January 1, the beginning of its fiscal year, are given below: Supreme Videos, Inc. Balance Sheet January 1 Assets Current assets: Cash Accounts receivable Inventories $63,000 102,000 Raw materials (film, costumes) Videos in process Finished videos awaiting sale $30,000 45,000 81,000 156,000 9,000 330,000 520,000 $850,000 Prepaid insurance Total current assets Less accumulated Total assets 730,000 210,000 Studio and equipment depreciation Liabilities and Stockholders’ Equity Accounts payable Capital stock Retained eamings $160,000 690,000 $850,000 $420,000 270,000 Total liabilities and stockholders’ equity 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 $280,000 in manufacturing overhead for an estimated allocation base of 7,000 camera-hours. The following transactions were recorded for the year:
