The following accounting events affected Vernon Manufacturing Company during its first three years of operation. Assume that all transactions are cash transactions. Transactions for Year 1 1. Started manufacturing company by issuing common stock for $3,600. 2. Purchased $1,210 of direct raw materials. 3. Used $700 of direct raw materials to produce inventory. 4. Paid $390 of direct labor wages to employees to make inventory. 5. Applied $270 of manufacturing overhead cost to Work in Process Inventory. 6. Finished work on inventory that cost $980. 7. Sold goods that cost $630 for $1,150. 8. Paid $390 for selling and administrative expenses. 9. Actual manufacturing overhead cost amounted to $208 for the year. Transactions for Year 2 1. Acquired additional $1,500 of cash from common stock. 2. Purchased $1,210 of direct raw materials. 3. Used $1,200 of direct raw materials to produce inventory. 4. Paid $570 of direct labor wages to employees to make inventory. 5. Applied $310 of manufacturing overhead cost to Work in Process Inventory. 6. Finished work on inventory that cost $1,900. 7. Sold goods that cost $1,590 for $2,810. 8. Paid $500 for selling and administrative expenses. 9. Actual manufacturing overhead cost amounted to $340 for the year. Transactions for Year 3 1. Paid a cash dividend of $600. 2. Purchased $1,450 of direct raw materials. 3. Used $1,170 of direct raw materials to produce inventory. 4. Paid $360 of direct labor wages to employees to make inventory. 5. Applied $300 of manufacturing overhead cost to work in process. 6. Finished work on inventory that cost $2,090. 7. Sold goods that cost $2,240 for $3,560. 8. Paid $660 for selling and administrative expenses. 9. Annual manufacturing overhead costs were $270 for the year. Required a.c.&d. Record the preceding events in horizontal statements models for each of the three years. Close overapplied or underapplied overhead to Cost of Goods Sold. Close appropriate accounts for Year 1, Year 2, and Year 3. In Year 1, the first event is shown as an example. b.&d. Prepare a schedule of cost of goods manufactured and sold, an income statement, and a balance sheet as of the close of business on December 31, Year 1, Year 2 and Year 3. Year 1 Horizontal Year 2 Horizontal Year 3 Horizontal CGM Schedule Financial Stmts Record the preceding events in horizontal statements models for each of the three years. Close overapplied or underapplied overhead to Cost of Goods Sold. Close approp first event is shown as an example. (Enter decreases to account balances with a minus sign.) Year 3 Horizontal Assets Equity Event No. Cash + Raw Materials Manufacturing Overhead Cost Work in Process Finished Goods Common Stock Retaining Earnings Revenue - Expenses = Net Income + + = $ 3,600 + + 1 2 $ 3,600 + (1,210)+ + + + 1,210 + (700) + + 7001 + + + + + + + + + + + + + + + + + + + + + + + 7b + + + + + + + + + + + + + + + CL + + + + + Total $ 2,390 + $ 510 + $ 0 + $ 700 + $ 0 = $ 3,600 + $ 0 $ 0 - $ 0 = $ 0 Year 1 Horizontal Year 2 Horizontal Year 3 Horizontal CGM Schedule Financial Stmts Record the preceding events in horizontal statements models for each of the three years. Close overapplied or underapplied overhead to Cost of Goods Sold. Close approp Year 1, the first event is shown as an example. (Enter decreases to account balances with a minus sign.) Assets Equity Manufacturing Work in Event No. Cash Raw Materials + + Overhead Cost Process . Finished Goods Common Stock Retaining Earnings Revenue Expenses = Net Income B.B. + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + *************** +++++++++++++++ + + + + + + + + + + + + + + Total $ 0 + $ 0 + $ 0 + $ 0 + $ 0 = $ 0 + $ 0 $ 0- $ 0 = $ 0 Year 1 Horizontal Year 3 Horizontal > Year 1 Horizontal Year 2 Horizontal Year 3 Horizontal CGM Schedule Financial Stmts Record the preceding events in horizontal statements models for each of the three years. Close overapplied or underapplied overhead to Cost of Goods Sold. Close approp Year 1, the first event is shown as an example. (Enter decreases to account balances with a minus sign.) Assets Equity Event No. . Raw Materials Cash Manufacturing Overhead Cost Work in Process Finished Goods Common. Retaining Stock Earnings Revenue - Expenses = Net Income B.B. + + + + + 1 + + + + + 2 + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + 7b + + + + + 8 + + + + + 9 + + + + + CL + + + + + Total $ 0 + + $ 0 + + $ 0 + + $ 0 + $ 0 = $ 0 + $ 0 $ 0 - $ 0 = $ 0 Year 1 Horizontal Year 2 Horizontal Year 3 Horizontal CGM Schedule Financial Stmts Prepare a schedule of cost of goods manufactured and sold for Year 1, Year 2 and Year 3. VERNON MANUFACTURING COMPANY Cost of Goods Manufactured and Sold Schedule Year 1 Year 2 Year 3 Raw materials available 0 0 0 Raw materials used 0 0 0 Total manufacturing costs 0 0 Total work in process inventory Cost of goods manufactured 0 0 Goods available for sale 0 0 0 Cost of goods sold $ 0 $ 0 $ Year 1 Horizontal Year 2 Horizontal Year 3 al Horizontal CGM Schedule Financial Stmts Prepare an income statement and a balance sheet as of the close of business on December 31, Year 1, Year 2 and Year 3. VERNON MANUFACTURING COMPANY Financial Statements Year 1 Year 2 Income Statements Year 3 000 $ 0 $ 0 $ 0 Balance Sheets Assets HIIH $ 0 $ 0 $ 0 Total assets Equity Total equity 0 $ 0 $