Question

Finch Manufacturing started in 2018 with the following account balances:

Cash	$	5,300
Common stock		4,313
Retained earnings		5,900
Raw materials inventory		1,700
Work in process inventory		840
Finished goods inventory (420 units @ $5.65 each)		2,373

  

Transactions during 2018

1. Purchased $2,910 of raw materials with cash.

2. Transferred $3,830 of raw materials to the production department.

3. Incurred and paid cash for 190 hours of direct labor @ $15.10 per hour.

4. Applied overhead costs to the Work in Process Inventory account. The predetermined overhead rate is $16.00 per direct labor hour.

5. Incurred actual overhead costs of $3,300 cash.

6. Completed work on 1,250 units for $5.70 per unit.

7. Paid $1,190 in selling and administrative expenses in cash.

8. Sold 1,250 units for $10,000 cash revenue (assume FIFO cost flow).

9. Finch charges overapplied or underapplied overhead directly to Cost of Goods Sold.

Required

1. Record the preceding events in a horizontal statements model. The beginning balances are shown as an example.

2. Prepare a schedule of cost of goods manufactured and sold, an income statement, and a balance sheet for 2018.

Req B CGNM Sched Req A Req B Inc Stmt Req B Bal Sheet Record the preceding events in a horizontal statements model·The beginning balances are shown as an exarnple. (Enter decreases to account balances with a minus sign.) Equity Assets Retained Earnings Net Income Work in Process Finished_ Common+ 9 RevenueExpens Raw + Materials Event Cash Overhead Manufacturing Stock Goods No B.B.5,300+ +$ 1,700$840 2,373$ 4,313 5,900 8b. Total ReqA Req B CGM Sched>

Answer 1

Part A: horizontal statements model Assets = Stockholders' Equity Income Statement Work in Manufacturing Raw Process Finished + overhead + Materials + Inventory + Goods = Common Stock + Retained Earnings Revenue - Expense = Net Income 5,300 + 1,700 + 840 + 2,373 = 4 3131+ 5,900 -2910+ 2910 + 1 Event No.Cash Beg bal -3830+ 3830+ -2869 + 2869+ -3040 + 3040 + -3300 + 3300+ -7125+1 7125 + -1190 + -1190 8а 10000 + 10000 - 8b -7104 = -1190 10000 -7104 -260 7,346 10000 -7104 -260 1,446 7104 = 260 8,554 = -2601 0 + Bal. 5,031 + 780 + 3,454+ 2,394 10,000 - Working: Event calculation 3 190* 15.1 4190* 16 6 1250*5.7 8b (2373+(1250-420)*5.7) 9 3300-3040 2869 3040 7125 7104 260

Part B: 10,000 FINCH MANUFACTURING COMPANY Income Statement For the Year Ended December 31, 2018 sales revenue cost of goods sold (7104+260) 7,364 gross margin 2,636 selling and administration expense 1,190 net income 1,446 FINCH MANUFACTURING COMPANY Balance Sheet As of December 31, 2018 Assets Cash 5,031 Raw Materials 780 Workin Process Inventory Finished Goods 3,454 2,394 FINCH MANUFACTURING COMPANY schedule of cost of goods manufactured and sold for the year. For the year ended Dec 31, 2018 Beginning raw materials Inventory 1,700 Purchases 2910 Raw materials available 4,610 Ending raw materials inventory -780 Raw materia used 3,830 Labor 2869 Overhead 3040 Total manufacturing costs 9,739 Beginning work in process inventory Total work in process inventory 10,579 Ending work in process inventory Cost of goods manufactured 7,125 Beginning finished goods inventory 2.373 Goods available 9,498 Ending finished goods inventory -2,394 Cost of goods sold 7,104 Total assets Stockholders' Equity Common Stock Retained Earnings Total stockholders' equity 11,659