Thornton Construction Company began operations on January 1, Year 1, when it acquired $10,000 cash from the issuance of common stock. During the year, Thornton purchased $2,600 of direct raw materials and used $2,400 of the direct materials. There were 104 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 Materials Direct Labor Hours Job 1 $ 400 26 Job 2 1,000 48 Job 3 1,000 30 The company paid $47 cash for indirect labor costs. Actual overhead cost paid in cash other than indirect labor was $245. Thornton completed Jobs 1 and 2 and sold Job 1 for $1,290 cash. The company incurred $150 of selling and administrative expenses that were paid in cash. Over- or underapplied overhead is closed to Cost of Goods Sold.

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

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