Question

Gordon Manufacturing started 2014 with the following account balances.
Cash ..................... $3,500
Common stock ................. 2,800
Retained earnings ................ 1,400
Raw materials inventory ............ 300
Work in process inventory ............ 220
Finished goods inventory (50 units @ $3.60/unit) .. 180
Transactions during 2014
1. Purchased $800 of raw materials with cash.
2. Transferred $500 of raw materials to the production department.
3. Incurred and paid cash for 80 hours of direct labor at $7.50 per hour.
4. Applied overhead costs to Work in Process Inventory. The predetermined overhead rate is $7.50 per direct labor hour.
5. Incurred actual overhead costs of $650 cash.
6. Completed work on 300 units for $3.60 per unit.
7. Paid $200 in selling and administrative expenses in cash.
8. Sold 200 units for $1,500 cash revenues. (Assume LIFO cost flow.)
Gordon charges overapplied or underapplied overhead directly to Cost of Goods Sold.

Required
a. Record the preceding events in a horizontal statements model. The beginning balances are shown as an example.
b. Prepare a schedule of cost of goods manufactured and sold, an income statement, and a balance sheet for 2014.



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  • CreatedFebruary 07, 2014
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