Thornton Construction Company began operations on January 1, Year 1, when it acquired $20,000 cash from the issuance of common stock. During the year, Thornton purchased $2,800 of direct raw materials and used $2,500 of the direct materials. There were 110 hours of direct labor worked at an average rate of $7 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. Direct Labor Hours Job 1 Job 2 Job 3 Direct Materials $ 600 1,000 900 28 The company paid $73 cash for indirect labor costs. Actual overhead cost paid in cash other than indirect labor was $247. Thornton completed Jobs 1 and 2 and sold Job 1 for $1,520 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. Required a. Record the preceding events in a horizontal statements model. The first event for Year 1 has been recorded as an example. c. Record the closing entry for over- or underapplied manufacturing overhead in the horizontal statements model, assuming that the amount is insignificant. d. Prepare a schedule of cost of goods manufactured and sold, an income statement, and a balance sheet for Year 1. Req A and C Req D CGM Sched Reg D Inc Stmt Reg D Bal Sheet Record the preceding events in a horizontal statements model. Record the closing entry for over- or underapplied manufacturing overhead in the horizontal statements model, assuming that the amount is insignificant. The first event for Year 1 has been recorded as an example. (Record each cost category for the jobs in total. When entering cost data, please combine all job costs of direct raw materials, direct labor, and manufacturing overhead respectively into one entry for each job. Enter any decreases to account balances with a minus sign.) Show less Assets Raw Materials h Manufacturing Overhead 20,000 + Work In Process Finished Goods Equity - Common Retained Stock Earnings 20,000 + Revenue - Expenses = Net Income + + + + + + + + + + + + + + + + + + + 20,000 + + 0 = 20,000 + Req D CGM Sched Reg D Inc Stmt Reg D Bal Sheet Prepare a schedule of cost of goods manufactured and sold for THORNTON CONSTRUCTION COMPANY Cost of Goods Manufactured and sold for Year 1 Raw materials available Raw materials used Total manufacturing costs Total work in process inventory Cost of goods manufactured Goods available for sale Cost of goods sold Req A and C Reg D CGM Sched Reg D Inc Stmt Reg D Bal Sheet Prepare an income statement for Year 1. THORNTON CONSTRUCTION COMPANY Income Statement for Year 1 0 Req A and C Req D CGM Sched Reg D Inc Stmt Reg D Bal Sheet Prepare a balance sheet for Year 1. THORNTON CONSTRUCTION COMPANY Balance Sheet for Year 1 Assets Total assets Equity Total equity
