Question

Walton Manufacturing Corporation was started with the issuance of common stock for $70,000. It purchased $7,400 of raw materials and worked on three job orders during Year 1 for which data follow. (Assume that all transactions are for cash unless otherwise indicated.)

	Direct Raw Materials Used				Direct Labor
Job 1		$	1,300			$	2,100
Job 2			2,200				3,900
Job 3			2,900				1,900
Total		$	6,400			$	7,900

Factory overhead is applied using a predetermined overhead rate of $0.70 per direct labor dollar. Jobs 2 and 3 were completed during the period and Job 3 was sold for $10,430 cash. Walton paid $600 for selling and administrative expenses. Actual factory overhead was $6,030.

Required

1. a. Record the preceding events in a horizontal statements model. The first event for Year 1 has been recorded as an example.

2. c. Record the closing entry for over- or underapplied manufacturing overhead in the horizontal statements model, assuming that the amount is insignificant.

3. d. Prepare a schedule of cost of goods manufactured and sold, an income statement, and a balance sheet for Year 1

Answer 1