Walter Roofing Corporation was founded on January 1, 2015, when stockholders contributed $6,000 for common stock. During the year, Walter purchased $3,200 of direct raw materials and used $2,760 of direct materials. There were 80 hours of direct labor worked at an average rate of $8 per hour paid in cash. The predetermined overhead rate was $6.50 per direct labor hour. The company started three custom roofing jobs. The job cost sheets reflected the following allocations of costs to each.

The company paid $176 cash for indirect labor costs and $240 cash for production supplies, which were all used during 2015. Actual overhead cost paid in cash other than indirect materials and indirect labor was $144. Walter completed Roofs 1 and 2 and collected the contract price for Roof 1 of $2,500 cash. The company incurred $496 of selling and administrative expenses that were paid with 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 2015 has been recorded as an example.

b. Reconcile all subsidiary accounts with their respective control accounts.
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 for2015.

Transcribed Image Text:

Direct Materials Direct Labor Hours Roof 1 Roof 2 Roof 3 $1,000 560 1,200 20 12 48 Assets Equity Cash Raw M.+ MOHWIP F GoodsC. Stk. Ret. Ear. Rev. E Exp. Net Inc . 4,000 + NA + NA + NA + NA = 4,000 + NA NA - NA NA