Manufacturing cost flow for monthly and annual accounting periods Francia Manufacturing Company manufactures puzzles that depict the works of famous artists. The company rents a small factory and uses local labor on a part-time basis. The following accounting events affected Francia during its first year of operation. (Assume that all transactions are cash transactions unless otherwise stated.)

Transactions for First Month of Operation 2006 1. Issued common stock for $25,000.

2. Purchased $4,000 of direct raw materials and $300 of indirect raw materials. Indirect materials are recorded in a Production Supplies account.

3. Used $3,896 of direct raw materials.

4. Used 700 direct labor hours; production workers were paid $6 per hour.

5. Expected total overhead costs for the year to be $16,800 and direct labor hours used during the year to be 9,600. Calculate an overhead rate and apply the appropriate amount of overhead costs to Work in Process.

6. Paid $800 for salaries to administrative and sales staff.

7. Paid $700 for indirect manufacturing labor.

8. Paid $600 for rent and utilities on the manufacturing facilities.

9. Started and completed 956 puzzles; all costs were transferred from the Work in Process Inventory account to the Finished Goods Inventory account.

10. Sold 800 puzzles at a price of $12 each.

Transactions for Remainder of 2006 11. Acquired an additional $200,000 by issuing common stock.

12. Purchased $46,000 of direct raw materials and $4,000 of indirect raw materials.

13. Used $41,050 of direct raw materials.

14. Paid production workers $6 per hour for 9,800 hours of work.

15. Applied the appropriate overhead cost to Work in Process Inventory.

16. Paid $8,800 for salaries of administrative and sales staff.

17. Paid $7,700 for the salary of the production supervisor.

18. Paid $6,600 for rental and utility costs on the manufacturing facilities.

19. Transferred 12,000 additional puzzles that cost $9.75 each from Work in Process Inventory to Finished Goods Inventory accounts.

20. Determined that $2,900 of production supplies was on hand at the end of the accounting period.

21. Sold 8,000 puzzles for $12 each.

22. Determine whether overhead is over- or underapplied. Close the Manufacturing Overhead account to Cost of Goods Sold.

23. Close the revenue and expense accounts.

Required

a. Open T-accounts and post transactions to the accounts.

b. Prepare a schedule of cost of goods manufactured and sold, an income statement, a balance sheet, and a statement of cash flows for 2006.