Jordan Manufacturing Corporation was started with the issuance of common stock for $75,000. It purchased $6,700...

Jordan Manufacturing Corporation was started with the issuance of common stock for $75,000. It purchased $6,700 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		$	1,100		$	1,900
Job 2			1,900			3,900
Job 3			2,900			2,000
Total		$	5,900		$	7,800

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 $10,100 cash. Jordan paid $600 for selling and administrative expenses. Actual factory overhead was $5,960.

Required

a. Record the preceding events in a horizontal statements model. The first event for Year 1 has been recorded as an example.
c. Record the closing entry for over- or underapplied manufacturing overhead in the horizontal statements model, assuming that the amount is insignificant.
d. Prepare a schedule of cost of goods manufactured and sold, an income statement, and a balance sheet for Year 1.

Expert Solution

Horizontal Satement Models
	Assets					Equity
Particluar	Cash	Manufacturing Overhead	Raw Materials	Work in Process	Finished	Common Stock	Retained Earnings	Revenues	Expenses	Net Income
Issuance of Common Stock	$75,000					$75,000
Material Purchased	-$6,700		$6,700
Material Used			-$5,900	$5,900
Labour Used & Paid	-$7,800			$7,800
Applied Overhead ( 7800*0.70)		-$5,460		$5,460
Actual Overhead Paid	-$5,960	$5,960
Trff Finished from WIP ((1900+2900)+(3900+2000)*1.70)				-$14,830	$14,830
Job-3 Sold (2900+(2000*1.70)	$10,100				-$6,300			$10,100	$6,300
Selling & Admin	-$600								$600
Underapplied Overhead		-$500							$500
							$2,700
	$64,040	$0	$800	$4,330	$8,530	$75,000	$2,700	$10,100	$7,400	$2,700

Jordan Manufacturing Company
Income Statement
Sales Revenue	$10,100.00
Less Cot of Goods Sold ( Adjusted) (6300+500)	$6,800.00
Gross Profit	$3,300.00
Less: Selling and Administrative Expenses	-$600.00
Net Operating Income	$2,700.00
Jordan Manufacturing Company
Balance Sheet
Assets
Cash	$64,040.00
Finished Goods Inventory	$8,530.00
Work in Process Inventory	$4,330.00
Raw Materials Inventory	$800.00
Total Assets	$77,700.00
Equity
Common Stock	$75,000.00
Retained Earnings	$2,700.00
Total Equity	$77,700.00

Requirement -c: Closing Journal Entry
Account Tittle	Debit	Credit
Cost of Goods Sold	500
Manufacturing Overhead		500
To record Underapplied Overhead

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