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