Question

The following accounting events affected Fowler Manufacturing Company during its first three years of operation. Assume that all transactions are cash transactions.
Transactions for 2013
1. Started manufacturing company by issuing common stock for $2,000.
2. Purchased $600 of direct raw materials.
3. Used $432 of direct raw materials to produce inventory.
4. Paid $360 of direct labor wages to employees to make inventory.
5. Applied $360 of manufacturing overhead to Work in Process Inventory.
6. Actual manufacturing overhead costs amounted to $366.
7. Finished work on inventory that cost $648.
8. Sold goods that cost $432 for $576.
9. Paid $36 for selling and administrative expenses.
Transactions for 2014
1. Acquired additional $600 of cash from issuance of common stock.
2. Purchased $576 of direct raw materials.
3. Used $504 of direct raw materials to produce inventory.
4. Paid $432 of direct labor wages to employees to make inventory.
5. Applied $384 of manufacturing overhead to Work in Process Inventory.
6. Actual manufacturing overhead costs amounted to $378.
7. Finished work on inventory that cost $1,080.
8. Sold goods that cost $1,008 for $1,152.
9. Paid $72 for selling and administrative expenses.
Transactions for 2015
1. Purchased $360 of direct raw materials.
2. Used $576 of direct raw materials to produce inventory.
3. Paid $216 of direct labor wages to employees to make inventory.
4. Applied $300 of manufacturing overhead to Work in Process Inventory.
5. Actual manufacturing overhead costs amounted to $312.
6. Finished work on inventory that cost $1,188.
7. Sold goods that cost $1,296 for $1,584.
8. Paid $144 for selling and administrative expenses.
9. Paid a cash dividend of $288.
Required
a. Record the preceding events in a horizontal statements model. Close overapplied or underapplied overhead to Cost of Goods Sold. The first event is shown as an example.


b. Prepare a schedule of cost of goods manufactured and sold, an income statement, and a balance sheet as of the close of business on December 31, 2013.
c. Close appropriate accounts to the Retained Earnings account.
d. Repeat Requirements a through c for years 2014 and2015.


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  • CreatedFebruary 07, 2014
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