Question

Conway Manufacturing Company was started on January 1, 2014. The company was affected by the following events during its first year of operation. 1. Acquired $1,700 cash from the issue of common stock 2. Paid $510 cash for direct raw materials. 3. Transferred $380 of direct raw materials to work in process. 4. Paid production employees $640 cash 5. Paid $380 cash for manufacturing overhead costs. Applied $200 of manufacturing overhead costs to work in process. 7. Completed work on products that cost $1,020. 8. Sold products that cost $820 for $1,570 cash. 9. Paid $350 cash for selling and administrative expenses. 10. Made a $90 cash distribution to the owners. 11. Closed the Manufacturing Overhead account. Required: a. Record these events in a horizontal statements model. The first event is shown as an example. (Enter decreases to account balances with a minus sign.) Assets Equity Manufacturing Overhead Finished + Goods Work in + Process Common Retained Event No. Raw + Materials Net Revenue -Expense Cash+ Stock Earnings Income 1,700 1 1,700 2. + + 3. + + + 4. + + + 5. + + + 6. + + + 7. + + + 8а. + + 8b +1 9. + 10. + 11 + + $ Total 1,700 0 +$ 0 $ 0 $1,700 $ $ $ 0 0 0 O

Answer 1

Assets Raw Work in Finished + Materials + Process + Goods Equity Common Retained = Stock + Earnings $1,700 + Net - Expenses = Income Event No. Revenue Manufacturing Cash + Overhead $1,700 ($510) + + + + + $510 + ($380) + + + + + $380 $640 + + + ($640) + ($380) + + + + + $380 ($200) + + + + + $200 ($1,020) + + + + $1,020 + 8a $1,570 + + + + + $1,570 ($820) + + + + + $820 = $350 = 1570 ($820) ($350) + + + + 9 10 $350) + ($90) + + $1,570 ($820) ($350) ($90) ($180) $130 + + + + + ($180) + $0 + $180 = $1,350 = Total $1,300 + $130 + ($180) $220 $200 + $200 = $1,700 + $1,570 b CONVAY MANUFACTURING COMPANY Schedule of Cost of Goods Manufactured and Sold Beginning raw materials inventory $0 Add: Cost of raw materials purchased $510 Raw materials available $510 Ending raw materials inventory $130 Raw materials used $380 Labour Cost $640 Manufacturing Overhead $200 Total manufacturing costs $1,220 Beginning work in process inventory Total work in process inventory $1,220 Ending work in process inventory $200 Cost of goods manufactured $1,020 Beginning finish goods inventory Cost of goods available for sale $1,020 Ending finish goods inventory $200 Cost of goods sold S820 $0