Ladora Construction Company began operations on January 1, 2019, when it acquire
ID: 2547585 • Letter: L
Question
Ladora Construction Company began operations on January 1, 2019, when it acquired $30,000 cash from the issuance of common stock. During the year, Ladora purchased $6,000 of direct raw materials and used $5,640 of the direct materials. There were 108 hours of direct labor worked at an average rate of $20 per hour paid in cash. The predetermined overhead rate was $9 per direct labor hour. The company started construction on three prefabricated buildings. The job cost sheets reflected the following allocations of costs to each building:
Direct Materials Direct Labor Hours
Job 1 1440 30
Job 2 2400 50
Job 3 1800 28
The company paid $320 cash for indirect labor costs. Actual overhead cost paid in cash other than indirect labor was $640. Ladora completed Jobs 1 and 2 and sold Job 1 for $5,000 cash. The company incurred $600 of selling and administrative expenses that were paid in 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 2019 has been recorded as an example.
Assets = Equity
Cash + Raw M. + MOH + WIP + F. Goods = C. Stock + Ret. Ear. Rev. - Exp. = Net Income
30000 NA NA NA NA = 30000 + NA NA - NA = NA
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 for 2019.
Explanation / Answer
Answer:
Sales+Closing Stock of Raw Material+Closing Stock of WIP+Closing Stock of Finished Goods-(Purchase+labour+Overhead+Selling Exp)=Net Profit
5000+360+3850+2612-(6000+2160+960+600)=2102
Cash+Stock of Raw Material+Stock of WIP+Stock of Finished Goods=Equity+Profit
25280+360+3850+2612=30000+2102
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