Job-order costing system

Job-order costing system

Presley Roofing Corporation was founded on January 1, 2012, when stockholders contributed

$5,000 for common stock. During the year, Presley purchased $2,400 of direct raw materials and used $2,160 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 alloca- tions of costs to each.

The company paid $176 cash for indirect labor costs and $240 cash for production sup- plies, which were all used during 2012. Actual overhead cost paid in cash other than indirect materials and indirect labor was $144. Presley completed Roofs 1 and 2 and collected the contract price for Roof 1 of $2,160 cash. The company incurred $496 of selling and adminis- trative expenses that were paid with cash. Over- or underapplied overhead is closed to Cost of Goods Sold.

Required

1. Record the preceding events in a horizontal statements model. The first event for 2012 has been recorded as an example.

1. Reconcile all subsidiary accounts with their respective control accounts.

2. Record the closing entry for over- or underapplied manufacturing overhead in the horizontal statements model, assuming that the amount is insignificant.

3. Prepare a schedule of cost of goods manufactured and sold, an income statement, and a bal- ance sheet for 2012.