Product cost flow and financial statements Murray Manufacturing began business on January 1, 2012. The following events pertain to its first year of operation.

1. Acquired $3,000 cash by issuing common stock.

2. Paid $600 cash for direct raw materials.

3. Transferred $500 of direct raw materials to Work in Process Inventory.

4. Paid production employees $700 cash.

5. Applied $325 of manufacturing overhead costs to Work in Process Inventory.

6. Completed work on products that cost $1,100.

7. Sold products for $1,600 cash.

8. Recognized cost of goods sold from Event No. 7 of $875.

9. Paid $450 cash for selling and administrative expenses.

10. Paid $350 cash for actual manufacturing overhead costs.

11. Made a $200 cash distribution to owners.

12. Closed the Manufacturing Overhead account.

Required

a. Record the preceding events in a horizontal statements model. The first event is shown as an example.

b. Prepare a schedule of cost of goods manufactured and sold.

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Assets Equity C. Stk. + Ret. Ear. + MOH + Raw M. + WIP + F. Goods Rev. Exp. Cash Net Inc. %3D NA NA 3,000 NA 3,000 NA NA NA +. +. %3D NA %3D NA