Fanning Construction Company began operations on January 1, Year 1, when it acquired $18,000 cash from...

Transcribed Image Text:

Fanning Construction Company began operations on January 1, Year 1, when it acquired $18,000 cash from the issuance of common stock. During the year, Fanning purchased $2,600 of direct raw materials and used $2,500 of the direct materials. There were 104 hours of direct labor worked at an average rate of $6 per hour paid in cash. The predetermined overhead rate was $3.00 per direct labor hour. The company started construction on three prefabricated buildings. The job cost sheets reflected the following allocations of costs to each building. Job 1 Job 2 Job 3 Direct Labor Direct Materials $ 500 Hours 30 48 26 1,100 900 The company paid $61 cash for indirect labor costs. Actual overhead cost paid in cash other than indirect labor was $241. Fanning completed Jobs 1 and 2 and sold Job 1 for $1,410 cash. The company incurred $130 of selling and administrative expenses that were paid in cash. Over- or underapplied overhead is closed to Cost of Goods Sold. 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-1. Prepare a schedule of cost of goods manufactured and sold for Year 1. d-2. Prepare an income statement for Year 1. d-3. Prepare a balance sheet for Year 1. Fanning Construction Company began operations on January 1, Year 1, when it acquired $18,000 cash from the issuance of common stock. During the year, Fanning purchased $2,600 of direct raw materials and used $2,500 of the direct materials. There were 104 hours of direct labor worked at an average rate of $6 per hour paid in cash. The predetermined overhead rate was $3.00 per direct labor hour. The company started construction on three prefabricated buildings. The job cost sheets reflected the following allocations of costs to each building. Job 1 Job 2 Job 3 Direct Labor Direct Materials $ 500 Hours 30 48 26 1,100 900 The company paid $61 cash for indirect labor costs. Actual overhead cost paid in cash other than indirect labor was $241. Fanning completed Jobs 1 and 2 and sold Job 1 for $1,410 cash. The company incurred $130 of selling and administrative expenses that were paid in cash. Over- or underapplied overhead is closed to Cost of Goods Sold. 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-1. Prepare a schedule of cost of goods manufactured and sold for Year 1. d-2. Prepare an income statement for Year 1. d-3. Prepare a balance sheet for Year 1.

Answer rating: 100% (QA)

a Horizontal Statement Model Date Account Title Debit Credit Jan 1 Cash 18000 Common Stock 18000 Dir... View the full answer