Perez Manufacturing Corporation was started with the issuance of common stock for $70,000. It purchased $7,400 of raw materials and worked on three job orders during Year 1 for which data follow. (Assume that all transactions are for cash unless otherwise indicated.)

	Direct Raw Materials Used				Direct Labor
Job 1		$	1,500			$	2,200
Job 2			2,100				4,000
Job 3			3,000				1,800
Total		$	6,600			$	8,000

Factory overhead is applied using a predetermined overhead rate of $0.60 per direct labor dollar. Jobs 2 and 3 were completed during the period and Job 3 was sold for $10,080 cash. Perez paid $600 for selling and administrative expenses. Actual factory overhead was $5,100.

Required

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

b. Record the closing entry for over- or underapplied manufacturing overhead in the horizontal statements model, assuming that the amount is insignificant.

c. Prepare a schedule of cost of goods manufactured and sold, an income statement, and a balance sheet for Year 1.

Assets Raw + Material Cash Manufacturing Overhead + Work In Process + Finished Goods Equity Common Retained Stock Earnings 70,000 + + Revenue Expense = Net Income 70,000 + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + Assets Raw + Material Cash Manufacturing Overhead + Work In Process + Finished Goods Equity Common Retained Stock Earnings 70,000 + + Revenue Expense = Net Income 70,000 + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + +