Finch Construction Company began operations on January 1, Year 1, when it acquired $20,000 cash from the issuance of common stock. During the year, Finch purchased $2,700 of direct raw materials and used $2,500 of the direct materials. There were 108 hours of direct labor worked at an average rate of $8 per hour paid in cash. The predetermined overhead rate was $3.00 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.

Job 1 : Direct Materials: $600 Direct Labor Hours: 28

Job 2: Direct Materials: $900 Direct Labor Hours: 52

Job 3: Direct Materials: $1000 Direct Labor Hours: 28

The company paid $51 cash for indirect labor costs. Actual overhead cost paid in cash other than indirect labor was $253. Finch completed Jobs 1 and 2 and sold Job 1 for $1,578 cash. The company incurred $140 of selling and administrative expenses that were paid in cash. Over- or underapplied overhead is closed to Cost of Goods Sold.

a. Record the preceding events in a horizontal statements model. The first event for Year 1 has been recorded as an example.

Equity Assets Raw Materials Manufacturing | Overhead Cash Work in Process + Finished Goods Retained Earnings Revenue Common Stock 20,000 Expenses Net Income 20,000 + + + + + 2,500 + (2,500) 2,700 + + + + + 864 + (2,700) (864) (51) (253) + + 51 253 + + + + (140) + + (140) - + 140 (140) + (324) + + 324 + + + + + + + + + + + + + + + + 15,992 (20) 200 3,688 20,000 (140) 140 (140) + + +