The following accounting events affected Carmel Manufacturing Company during its first three years of operation. Assume that

Question:

The following accounting events affected Carmel Manufacturing Company during its first three years of operation. Assume that all transactions are cash transactions.

Transactions for 2017

1. Started manufacturing company by issuing common stock for $1,000.

2. Purchased $300 of direct raw materials.

3. Used $216 of direct raw materials to produce inventory.

4. Paid $180 of direct labor wages to employees to make inventory.

5. Applied $180 of manufacturing overhead to Work in Process Inventory.

6. Actual manufacturing overhead costs amounted to $183.

7. Finished work on inventory that cost $324.

8. Sold goods that cost $216 for $288.

9. Paid $18 for selling and administrative expenses.

Transactions for 2018

1. Acquired additional $300 of cash from issuance of common stock.

2. Purchased $288 of direct raw materials.

3. Used $252 of direct raw materials to produce inventory.

4. Paid $216 of direct labor wages to employees to make inventory.

5. Applied $192 of manufacturing overhead to Work in Process Inventory.

6. Actual manufacturing overhead costs amounted to $189.

7. Finished work on inventory that cost $540.

8. Sold goods that cost $504 for $576.

9. Paid $36 for selling and administrative expenses.

Transactions for 2019

1. Purchased $180 of direct raw materials.

2. Used $288 of direct raw materials to produce inventory.

3. Paid $108 of direct labor wages to employees to make inventory.

4. Applied $150 of manufacturing overhead to Work in Process Inventory.

5. Actual manufacturing overhead costs amounted to $156.

6. Finished work on inventory that cost $594.

7. Sold goods that cost $648 for $792.

8. Paid $72 for selling and administrative expenses.

9. Paid a cash dividend of $144.

Required

a. Record the preceding events in a horizontal statements model. Close over applied or under applied overhead to Cost of Goods Sold. The first event is shown as an example.

The following accounting events affected Carmel Manufacturing Company during its

b. 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, 2017.
c. Close appropriate accounts to the Retained Earnings account.
d. Repeat Requirements a through c for years 2018 and 2019.

Common Stock
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A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...