Newton Advertisements Corporation designs and produces television commercials for clients. On March 1, 2019, the company issued common stock for $100,000 cash. During March, Newton worked on three jobs. Pertinent data follow:

Special Orders Materials Labor

Job 301.................. $4,500.............. 450 hours @ $32 per hour

Job 302.................... 7,600.............. 360 hours @ $60 per hour

Job 303.................... 6,100.............. 680 hours @ $28 per hour

Actual production overhead cost: $24,080

Predetermined overhead rate: $16 per direct labor hour

Newton paid these costs in cash. Jobs 301 and 302 were completed and sold for cash to customers during March. Job 303 was incomplete at month end. Job 301 sold for $32,000, and Job 302 sold for $45,000. Newton also paid $8,000 cash in March for selling and administrative expenses.

Newton uses a just-in-time inventory management system. Consequently, it has no raw materials inventory. Raw materials purchases are recorded directly in the Work in Process Inventory account.

Required

a. Use a horizontal financial statements model, as follows, to record Newton's accounting events for March 2019. The first event is shown as an example.

b. Record the entry to close the amount of under applied or over applied manufacturing overhead to Cost of Goods Sold (in the expense category) in the horizontal financial statements model.
c. Determine the gross margin for March.

Transcribed Image Text:

Assets -Equlty Work In Finlshed Manuf. Com. Ret. Cash + Process + Goods + Overhead = Stock + Ear. Rev. - Exp. Net Inc. 100,000 NA+NA NA 100,000 NANA NANA