Job-order cost system Runner Manufacturing Corporation was started with the issuance of common stock for $10,000. It purchased $7,000 of raw materials and worked on three job orders during 2007 for which data follow.

(Assume that all transactions are for cash unless otherwise indicated.)

Factory overhead is applied using a predetermined overhead rate of $0.50 per direct labor dollar. Jobs 2 and 3 were completed during the period and Job 3 was sold for $9,000. Runner paid $400 for selling and administrative expenses. Actual factory overhead was $3,500.
Required

a. Record the preceding events in a horizontal statements model. In the Cash Flow column, designate the cash flows as operating activities (OA), investing activities (IA), or financing activities (FA).
The first event for 2007 has been recorded as an example.
Cash Raw M. MOH WIP F. Goods C. Stk. Ret. Ear.
10,000 NA NA NA NA 10,000 NA NA  NA NA 10,000 FA Assets Equity Rev.  Exp. Net Inc. Cash Flow

b. Reconcile all subsidiary accounts with their respective control accounts.

c. Record the closing entry for over- or underapplied manufacturing overhead, assuming that the amount is insignificant. Close revenue and expense accounts.

d. Prepare a schedule of cost of goods manufactured and sold, an income statement, a balance sheet, and a statement of cash flows for 2007.