Solomon Construction Company began operations on January 1, Year 1, when it acquired $16,000 cash from the issuance of common stock. During the year, Solomon purchased $3,000 of direct raw materials and used $2,800 of the direct materials. There were 106 hours of direct labor worked at an average rate of $8 per hour paid in cash. The predetermined overhead rate was $4.00 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.

	Direct Materials			Direct Labor Hours
Job 1	$	700		30
Job 2		1,200		50
Job 3		900		26

The company paid $48 cash for indirect labor costs. Actual overhead cost paid in cash other than indirect labor was $358. Solomon completed Jobs 1 and 2 and sold Job 1 for $1,690 cash. The company incurred $160 of selling and administrative expenses that were paid in cash. Over- or underapplied overhead is closed to Cost of Goods Sold.

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 Materials Cash Manufacturing Overhead + Work In Process Finished Goods Equity Common Retained Stock Earnings 16,000 + Revenue Expenses = Net Income 16,000 + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + +