QUESTION 1 In January, 2020, Harmony Inc. has the following expenditures related to manufacturing a new generation of widgets. Match each expenditure to the appropriate accounting treatment on the right. V Takes possession of a widget- manufacturing machine. The vendor sends B. Expense, an invoice for $550,000. Pays employees $95,000 for research and development to finalize the widget design. ✓ Receives an invoice for $4,250 from the company that shipped the machine. V Pays sales tax of $33,000 on the machine to the government. Pays employees $16,500 to install, customize, and test the widget- manufacturing machine. Pays $3,000 for a one-year warranty (insurance) plan for the machine, with coverage beginning when the machine is placed into service on February 1. A. Capitalize to a different asset account. C. Capitalize to the Machine account. D. No accounting entry is necessary.
QUESTION 1 In January, 2020, Harmony Inc. has the following expenditures related to manufacturing a new generation of widgets. Match each expenditure to the appropriate accounting treatment on the right. V Takes possession of a widget- manufacturing machine. The vendor sends B. Expense, an invoice for $550,000. Pays employees $95,000 for research and development to finalize the widget design. ✓ Receives an invoice for $4,250 from the company that shipped the machine. V Pays sales tax of $33,000 on the machine to the government. Pays employees $16,500 to install, customize, and test the widget- manufacturing machine. Pays $3,000 for a one-year warranty (insurance) plan for the machine, with coverage beginning when the machine is placed into service on February 1. A. Capitalize to a different asset account. C. Capitalize to the Machine account. D. No accounting entry is necessary.
Chapter16: Accounting Periods And Methods
Section: Chapter Questions
Problem 4RP
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Transcribed Image Text:QUESTION 1
In January, 2020, Harmony Inc. has the following expenditures related to
manufacturing a new generation of widgets. Match each expenditure to the
appropriate accounting treatment on the right.
V
V
Takes possession of a widget-
manufacturing machine. The vendor sends
an invoice for $550,000.
Pays sales tax of $33,000 on the machine
to the government.
Pays employees $95,000 for research and
development to finalize the widget design.
Receives an invoice for $4,250 from the
company that shipped the machine.
Pays employees $16,500 to install,
customize, and test the widget-
manufacturing machine.
Pays $3,000 for a one-year warranty
(insurance) plan for the machine, with
coverage beginning when the machine is
placed into service on February 1.
A. Capitalize to a different asset account.
B. Expense,
C. Capitalize to the Machine account.
D. No accounting entry is necessary.
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