Question

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Exercise 11-14A Product cost flow and financial statements land Manufacturing Compañy was started on January 1, 2018. The company was affected by the following events during its first year of operation: 1. Acquired $2,400 cash from the issue of common stock. 2. Paid $720 cash for direct raw materials. 3. Transferred $480 of direct raw materials to work in process. 4. Paid production employees $720 cash. 5. Paid $360 cash for manufacturing overhead costs. 6. Applied $294 of manufacturing overhead costs to work in process 7. Completed work on products that cost $1,200. 8. Sold products that cost $960 for $1,680 cash 9. Paid $480 cash for selling and administrative expenses. 10. Made a $60 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 Assets Equity Cash + MOH + Raw M. + wiP + F, Goods C. Stk. + Ret. Ear· Rev. - Exp. Net Inc. 2.400 NA NA NANA2400 NA NA NANA b. Prepare a schedule of cost of goods manufactured and sold. Assets Net Income Cash Flows t Fin Goods C. Stock +Ret E Ina Ina Revenu Ex na na 0 No. Cash MOH Raw Mat + WP na 2400+na +Ina +Ina Ina 2400 +na 720+na + Ina +ina - na na na na 480 + na na na na 720+ na t na 360 +na 294 +na na Ina + Ina na Ina +Ina 294 +na 12001+1 na na 12001 na 1680 960 480 na 1680 - na 1680 +Ina Ina 1680+na +Ina 480 +na 1060+na 8 8a 9 8b.n 9601二 480 960 na +Ina t na na na -66 174 66 +Ina 1506 1680 2400 1740+ 3 Total 5 11-14 b Beginning Raw Materials Raw Material Purchases Raw Materials Available for use Ending Raw Materials Inventory Raw Materials Used Direct Labor Manufacturing Overhead Total Manufacturing Costs Beginning work in process inventory total work in progress inventory Ending Work in Progress Inventory Cost of Goods Manufactured Beginning Finished Goods Inventory Finished Goods Available for Sale Ending Finished Goods Inventory Cost of Goods Sold 720 960 720 360 2040 2040 1200 1200

Answer 1

Event	Balance Sheet							Income Statement
	Assets					Equity
	Cash	MOH	Raw Material Inventory	Work In Progress Inventory	Finished Goods Inventory	Common Stock	Retained earnings	Revenue	Expense	Net Income
1	$    2,400					$    2,400	$           -			$           -
2	$      (720)		$        720				$           -			$           -
3			$      (480)	$        480			$           -			$           -
4	$      (720)			$        720			$           -			$           -
5	$      (360)	$        360					$           -			$           -
6		$      (294)		$        294			$           -			$           -
7				$ (1,200)	$    1,200		$           -			$           -
8a	$    1,680						$    1,680	$    1,680		$    1,680
8b					$      (960)		$      (960)		$        960	$      (960)
9	$      (480)						$      (480)		$        480	$      (480)
10	$        (60)						$        (60)			$           -
11		$        (66)					$        (66)		$          66	$        (66)
Total	$    1,740	$           -	$        240	$        294	$        240	$    2,400	$        114	$    1,680	$    1,506	$        174

Company Name
Schedule of Cost of Goods Sold
For the year ended
Materials inventory at the beginning	$                      0
Add: purchase of material	$                 720
Material available for use	$                 720
Less: material inventory at ending	$                 240
Direct material consumed		$                        480
Direct labor		$                        720
Applied Manufacturing overhead		$                        294
Total manufacture cost		$                     1,494
Add: work in process inventory at the beginning		$                             0
Total work in progress inventory		$                     1,494
Less: work in process inventory at ending		$                        294
Cost of goods manufactured		$                     1,200
Add: finished goods inventory at the beginning		$                             0
Cost of goods available for sale		$                     1,200
Less: finished goods inventory at ending		$                        240
Unadjusted Cost of goods sold		$                        960
Add: Under applied Manufacture overhead (Hint: Closing entry for MOH.)		$                           66
Adjusted Cost of goods sold		$                     1,026