Conway Manufacturing Company was started on January 1, 2014. The company was aff
ID: 2484046 • Letter: C
Question
Conway Manufacturing Company was started on January 1, 2014. The company was affected by the following events during its first year of operation. 1. Acquired $2,300 cash from the issue of common stock. 2. Paid $580 cash for direct raw materials. 3. Transferred $380 of direct raw materials to work in process. 4. Paid production employees $700 cash. 5. Paid $380 cash for manufacturing overhead costs. 6. Applied $195 of manufacturing overhead costs to work in process. 7. Completed work on products that cost $1,080. 8. Sold products that cost $860 for $1,630 cash. 9. Paid $390 cash for selling and administrative expenses. 10. Made a $70 cash distribution to the owners. 11. Closed the Manufacturing Overhead account. Required: a. Record these events in a horizontal statements model.
Explanation / Answer
RECORDING EVENTS IN HORIZONTAL STATEMENT MODEL
____________________________________________________________________________________________
EVENT ASSETS = LIABILITIES + COMMON STOCK + R.E REV. - EXP. = NET INCOME CF
1 C 2,300 2,300 2,300
2 C (580) (580)
RM 580
3. RM (380)
WIP 380
4. WIP 700
C (700) (700)
5. MOH 380
C(380) (380)
6. WIP 195
MOH (195)
7. WIP (1080)
FGC 1080
8. C 1,630 RE 770 R1630 NI 1630 1630
9. C (390) RE (390) E 390 NI (390) (390)
10 C (70) RE(70) (70)
11 MOH (185) RE(185) E185 NI(185)
NOTE: C =CASH ; RM = RAW MATERIAL ; WIP=WORK IN PROGRESS; RE=RETAINED EARNINGS; E=EXPENSE; R=REVENUE = NI=NET INCOME; FGC;FINISHED GOODS CONTROL ; CF=CASH FLOWS; MOH=MANUFACTURING OVERHEAD