**Transcription for Educational Website:**---**Franklin Manufacturing Corporation Overview**Franklin Manufacturing Corporation was started with the issuance of common stock for $80,000. It purchased $7,300 of raw materials and worked on three job orders during Year 1 for which data follow. (Assume that all transactions are for cash unless otherwise indicated.)**Job Cost Details:**| | Direct Raw Materials Used | Direct Labor || --- | --- | --- || **Job 1** | $1,300 | $2,100 || **Job 2** | $2,000 | $3,800 || **Job 3** | $2,800 | $2,000 || **Total** | $6,100 | $7,900 |Factory overhead is applied using a predetermined overhead rate of $0.70 per direct labor dollar. Jobs 2 and 3 were completed during the period and Job 3 was sold for $9,800 cash. Franklin paid $500 for selling and administrative expenses. Actual factory overhead was $5,930.**Required:**a. Record the preceding events in a horizontal statements model. The first event for Year 1 has been recorded as an example.b. Record the closing entry for over- or underapplied manufacturing overhead in the horizontal statements model, assuming that the amount is insignificant.c. Prepare a schedule of cost of goods manufactured and sold for Year 1.d-1. Prepare an income statement for Year 1.d-2. Prepare a balance sheet for Year 1.---**Explanation of Table:**The table illustrates the expenses incurred on three jobs, categorizing the costs into two types: direct raw materials used and direct labor. The total of each category is summarized at the bottom of the table.**Factory Overhead Calculation:**Factory overhead costs are calculated at a rate of $0.70 for each direct labor dollar expended. This rate is used to determine how much to allocate for factory-related costs during production.**Additional Information:**- Jobs 2 and 3 were finished during the year.- Job 3 was sold for $9,800.- Selling and administrative expenditures amounted to $500.- Actual factory overhead ended up being $5,930.These instructions and data are to assist in completing financial statements and other related accounting tasks for Franklin Manufacturing Corporation in Year 1. ### Transcription for Educational Website#### InstructionsTo complete this exercise, enter your answers in the tabs provided:1. Record events in a horizontal statements model. An example for Year 1 has been recorded.2. Record the closing entry for over- or underapplied manufacturing overhead, assuming the amount is insignificant.3. Note: Record each item separately. Enter costs of each job individually. Use a minus sign for any decreases in account balances.---#### Horizontal Statements Model**Balance Sheet**- **Assets**: - Cash - Manufacturing Overhead - Raw Material - Work In Process - Finished Goods- **Liabilities**: - [Blank Column for Entries]- **Stockholders’ Equity**: - Common Stock - Retained Earnings**Income Statement**- Revenue- Expenses- Net Income---#### Example Entry**Assets:**- **Cash:** Start with $80,000, reflects initial example entry. - **Manufacturing Overhead:** Start with 0.- **Raw Material:** Start with 0.- **Work In Process:** Start with 0.- **Finished Goods:** Start with 0.**Liabilities:**- Start with balance = 0.**Stockholders' Equity:**- **Common Stock:** Start with $80,000, reflects initial equity.- **Retained Earnings:** Start with 0.**Income Statement:**- **Revenue:** Start with 0.- **Expenses:** Start with 0.- **Net Income:** Start with 0.All amounts reflect starting balances and will be adjusted according to entered transactions to reflect the financial status over the fiscal period being examined.

The job order costing system is the costing method that determines the total cost associated with each job being performed. This method is best suited for business entities which deal with unique job or product that is different from each other and performed as per the specification of the client.Calculation of jobs completed and manufacturing overheads (MOH) under applied:Resultant values:Preparation of cost of goods manufactured and sold schedule:Schedule of Cost of Goods Manufactured and SoldDirect materials:Beginning raw materials inventory $- Add: Purchase of raw materials $7,300Total raw materials available $7,300Less: Ending raw materials inventory $1,200Materials used in production $6,100Direct labor $7,900Manufacturing overheads $5,530Total manufacturing costs incurred $19,530 Add: Beginning work in process inventory $- The total cost of work in process inventory $19,530Less: Ending work in process inventory $4,870Cost of goods manufactured $14,660 Add: Beginning finished goods inventory $- Cost of goods available for sale $14,660 Less: Ending finished goods inventory $8,460Cost of goods sold $6,200 Add: Manufacturing overheads underapplied $400 Adjusted cost of goods sold $6,600 Preparation of income statement:Income StatementSales revenue $9,800Less: cost of goods sold $6,600Gross margin $3,200 Less: selling & administrative expense $500Net income $2,700 Preparation of balance sheet:Balance SheetAssets:Cash $68,170Inventory:Raw material $1,200Work in process $4,870Finished goods $8,460Total inventory $14,530Total assets $82,700 Liabilities $- Stockholders' equityCommon stock $80,000Retained earnings $2,700Total stockholders' equity $82,700Total liabilities and stockholders' equity $82,700Requirement A&C: Balance Sheet Income Statement Transactions Asset = Liabilities + Stockholders' Equity Revenue - Expense = Net Income Cash + Manufacturing overheads + Raw material + Work in process + Finished goods Common stock + Retained earnings Common Stock $80,000 ++++=+ $80,000 +-=Material purchase $(7,300)++ $7,300 ++=++-=Direct material used++ $(6,100)+ $6,100 +=++-=Direct labor used $(7,900)+++ $7,900 +=++-=MOH applied+ $(5,530)++ $5,530 +=++-=Jobs completed+++ $(14,660)+ $14,660 =++-=Jobs sold $9,800 ++++=++ $9,800 $9,800 -= $9,800 Cost of goods sold++++ $(6,200)=++ $(6,200)- $6,200 = $(6,200)S&A expense $(500)++++=++ $(500)- $800 = $(800)Actual MOH $(5,930)+ $5,930 +++=++-=Under-applied MOH+ $(400)+++=++ $(400)- $400 = $(400)Balance $68,170 + $- + $1,200 + $4,870 + $8,460 = $- + $80,000 + $2,700 $9,800 - $7,400 = $2,400

Business

Accounting

Franklin Manufacturing Corporation was started with the issuance of common stock for $80,000. It purchased $7,300 of raw materials and worked on three job orders during Year 1 for which data follow. (Assume that all transactions are for cash unless otherwise indicated.) Job 1 Job 2 Job 3 Total Direct Raw Materials Used $ 1,300 2,000 2,800 $ 6,100 Direct Labor $ 2,100 3,800 2,000 $ 7,900 Factory overhead is applied using a predetermined overhead rate of $0.70 per direct labor dollar. Jobs 2 and 3 were completed during the period and Job 3 was sold for $9,800 cash. Franklin paid $500 for selling and administrative expenses. Actual factory overhead was $5,930. 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-1. Prepare a schedule of cost of goods manufactured and sold for Year 1. d-2. Prepare an income statement for Year 1. d-3. Prepare a balance sheet for Year 1.

Franklin Manufacturing Corporation was started with the issuance of common stock for $80,000. It purchased $7,300 of raw materials and worked on three job orders during Year 1 for which data follow. (Assume that all transactions are for cash unless otherwise indicated.) Job 1 Job 2 Job 3 Total Direct Raw Materials Used $ 1,300 2,000 2,800 $ 6,100 Direct Labor $ 2,100 3,800 2,000 $ 7,900 Factory overhead is applied using a predetermined overhead rate of $0.70 per direct labor dollar. Jobs 2 and 3 were completed during the period and Job 3 was sold for $9,800 cash. Franklin paid $500 for selling and administrative expenses. Actual factory overhead was $5,930. 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-1. Prepare a schedule of cost of goods manufactured and sold for Year 1. d-2. Prepare an income statement for Year 1. d-3. Prepare a balance sheet for Year 1.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Subject: acounting