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CoursHeroTranscribedText: 1. Paul Products, Inc., uses a job-order costing system. The company's inventory balances on April 1, the start of its fiscal year, were as follows: Raw materials . . $42,000 Work in process $22,000 Finished goods . . . $58,000 During the year, the following transactions were completed: a) Raw materials were purchased on account, $172,000. b) Raw materials were issued from the storeroom for use in production, $185,000 (80% direct and 20% indirect). c) Employee salaries and wages were accrued as follows: direct labor, $200,000; indirect labor, $82,000; and selling and administrative salaries, $90,000. d) Utility costs were incurred in the factory, $75,000. e) Advertising costs were incurred, $100,000. f) Prepaid insurance expired during the year, $30,000 (90% related to factory operations, and 10% related to selling and administrative activities). g) Depreciation was recorded, $200,000 (85% related to factory assets, and 15% related to selling and administrative assets). h) Manufacturing overhead was applied to jobs at the rate of 190% of direct labor cost. i) Goods that cost $700,000 to manufacture according to their job cost sheets were transferred to the finished goods warehouse. j) Sales for the year totaled $1,000,000 and were all on account. The total cost to manufacture these goods according to their job cost sheets was $720,000. Required: (35 Marks) 1. Prepare journal entries to record the transactions for the year. 2. Prepare T-accounts for Raw Materials, Work in Process, Finished Goods, Manufacturing Overhead, and Cost of Goods Sold. Post the appropriate parts of your journal entries to these T-accounts. Compute the ending balance in each account. (Don't forget to enter the beginning balances in the inventory accounts.) 3. Is Manufacturing Overhead underapplied or overapplied for the year? Prepare a journal entry to close this balance to Cost of Goods Sold. 4. Prepare a schedule of cost of goods manufactured & a schedule of cost of goods sold. 5. Prepare an income statement for the year

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