Holmes & Watson Ltd specialises in home renovation and house flipping. It is currently August and their builders are working on two projects that were started mid-June, Job 41 and Job 42. The accumulated cost for Job 41 and Job 42 at the beginning of August are $25,000 and $260,000, respectively. At the beginning of August there is one completed and unsold project that cost $500,000. The following information is available:

The company started the period with $10,000 of raw materials on hand.

During August, the following overhead costs have been incurred:

General selling and administrative expense: $10,000

Depreciation: $1,500 (includes $600 for fixed assets used by selling and administrative functions and $900 for renovation equipment)

Advertising expense: $1,000

Property insurance related to the two jobs: $1,700

$35,000 worth of direct materials for appliances, flooring and paint were purchased on account, $20,000 of which was used for Job 41 and $15,000 for Job 42. The builders used other minor materials that cost a total of $900 on both jobs.

Employee time tickets recorded $8,000 for Job 41 and $12,000 for Job 42. The general contractor who manages and oversees both projects is currently owed $2,600.

Home renovation is a labour-intensive business and so an appropriate allocation base that reflects this should be used in allocating overhead. The annual manufacturing overhead cost is budgeted at $95,400, the estimated annual machine hours is 2,400 and the estimated annual direct labour hours is 7,200. Over the month, machines have worked for a total of 120 hours, and the employee time tickets reported 170 direct labour hours for Job 41 and 250 direct labour hours for Job 42.

Job 41 is completed during August and the client is billed for $73,000.

Required:

1. Prepare relevant journal entries for August.

2. Prepare the Schedule of Cost of Goods Manufactured for August.

3. Prepare the Schedule of Cost of Goods Sold for August.