Vernon Manufacturing started in Year 2 with the following account balances. Cash Common stock Retained earnings $6,000 5,151 5,400 1,400 890 2,261 Raw materials inventory Work in process inventory Finished goods inventory (380 units @ $5.95 each) Transactions during Year 2 1. Purchased $2,890 of raw materials with cash. 2. Transferred $3,770 of raw materials to the production department. 3. Incurred and paid cash for 240 hours of direct labor @ $15.30 per hour. 4. Applied overhead costs to the Work in Process Inventory account. The predetermined overhead rate is $16.00 per direct labor hour. 5. Incurred actual overhead costs of $4,000 cash. 6. Completed work on 1,250 units for $6.00 per unit. 7. Paid $1,160 in selling and administrative expenses in cash. 8. Sold 1,250 units for $10,600 cash revenue (assume FIFO cost flow). 9. Vernon charges overapplied or underapplied overhead directly to Cost of Goods Sold. Required a. Record the preceding events in a horizontal statements model. The beginning balances are shown as an example. b-1. Prepare a schedule of cost of goods manufactured and sold for Year 2. b-2. Prepare an income statement for Year 2. b-3. Prepare a balance sheet for Year 2.

Vernon Manufacturing started in Year 2 with the following account balances. Cash Common stock Retained earnings $6,000 5,151 5,400 1,400 890 2,261 Raw materials inventory Work in process inventory Finished goods inventory (380 units @ $5.95 each) Transactions during Year 2 1. Purchased $2,890 of raw materials with cash. 2. Transferred $3,770 of raw materials to the production department. 3. Incurred and paid cash for 240 hours of direct labor @ $15.30 per hour. 4. Applied overhead costs to the Work in Process Inventory account. The predetermined overhead rate is $16.00 per direct labor hour. 5. Incurred actual overhead costs of $4,000 cash. 6. Completed work on 1,250 units for $6.00 per unit. 7. Paid $1,160 in selling and administrative expenses in cash. 8. Sold 1,250 units for $10,600 cash revenue (assume FIFO cost flow). 9. Vernon charges overapplied or underapplied overhead directly to Cost of Goods Sold. Required a. Record the preceding events in a horizontal statements model. The beginning balances are shown as an example. b-1. Prepare a schedule of cost of goods manufactured and sold for Year 2. b-2. Prepare an income statement for Year 2. b-3. Prepare a balance sheet for Year 2.

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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