Question

Job-order costing system Ladora Construction Company began operations on January 1, 2019, when it acquired $30,000 cash from the issuance of common stock. During the year, Ladora purchased $6,000 of direct raw materials and used $5,640 of the direct materials. There were 108 hours of direct labor worked at an average rate of $20 per hour paid in cash. The predetermined overhead rate was $9 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: Direct Materials Direct Labor Hours Job 1 Job 2 Job 3 Job 2 $1,440 2.400 1,800 The company paid $320 cash for indirect labor costs. Actual overhead cost paid in cash other than indirect labor was $640. Ladora completed Jobs 1 and 2 and sold Job 1 for $5,000 cash. The company incurred $600 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 2019 has been recorded as an example.

Answer 1

	Ladora Construction company
	Assets										Equity				Income Statement
Particulars	Cash	+	Raw Mat	+	MOH	+	WIP	+	F.Goods	=	Cn.Stock	+	Ret. Ear		Rev	-	Exps	=	Net. Income
Issuance of common stock	30,000										30,000
Purchase of raw material	(6,000)		6,000
Direct Labour	(2,160)				2,160
Predetermined overheads	(972)				972
Indirect labour	(320)												(320)				320		(320)
Other overhead cost	(640)												(640)				640		(640)
Completion of Job 1			(1,440)		(870)				2,310
Completion of job 2			(2,400)		(1,450)				3,850
Moving job 3 to WIP			(1,800)		(812)		2,612
Sale of Job 1	5,000								(2,310)				2,690		5,000		2,310		2,690
Selling and Admin exps	(600)												(600)				600		(600)
Net Balances	24,308		360		-		2,612		3,850		30,000		1,130		5,000		3,870		1,130

Statement of Manufacturing
Particulars	Job 1	Job 2	Job 3	Total
Revenue from Sales	5,000	-	-	5,000
Cost of Manufacturing
Raw Material	1,440	2,400	1,800	5,640
Direct Labour	600	1,000	560	2,160
Predetermined overheads	270	450	252	972
Cost of Manufacturing (A)	2,310	3,850	2,612	8,772
Add:
Closing Stock of finisehd goods	-	3,850	-	3,850
Closing Stock WIP	-	-	2,612	2,612
(B)	-	3,850	2,612	6,462
Cost of Goods Sold (A-B)	2,310	-	-	2,310
Gross Earnings= Sales - Cost of goods Sold ( C )	2,690	-	-	2,690
Selling and Admin Expenses				600
Indirect Labour				320
Other Overhead cost				640
Total Indrirect expenses (D)				1,560
Net Earnings ( C - D)				1,130

Balance Sheet for 2019
Assets	Amount	Liabilities	Amount
Cash	24,308	Common Stock	30,000
Raw Material	360	Retained Earning	1,130
WIP - Job 3	2,612
Finished Goods - Job 2	3,850
Total	31,130	Total	31,130