With the following transactions, determine the Cost of Good Sold for a Manufacturing plant. A $7000 loan was obtained and deposited in cash. Another loan was obtained for the purchase of new equipment for the amount of 8426 with 5 years of life. The equipment is depreciated for the first year. Direct Labor is paid for the amount of 694. Packaging employees are paid for 1080. 200 materials were invoiced at 4 each for the inventory. 150 materials were used in production. The 150 units were sold at $4.00 each and they are invoiced. Sales and distribution expenses for $1000 were paid.

With the following transactions, determine the Cost of Good Sold for a Manufacturing plant. A $7000 loan was obtained and deposited in cash. Another loan was obtained for the purchase of new equipment for the amount of 8426 with 5 years of life. The equipment is depreciated for the first year. Direct Labor is paid for the amount of 694. Packaging employees are paid for 1080. 200 materials were invoiced at 4 each for the inventory. 150 materials were used in production. The 150 units were sold at $4.00 each and they are invoiced. Sales and distribution expenses for $1000 were paid.

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter11: Long-term Assets

Section: Chapter Questions

Problem 2EB: Johnson, Incorporated had the following transactions during the year: Purchased a building for...

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During the current year, Arkells Inc. made the following expenditures relating to plant machinery. Renovated five machines for $100,000 to improve efficiency in production of their remaining useful life of five years Low-cost repairs throughout the year totaled $70,000 Replaced a broken gear on a machine for $10,000 A. What amount should be expensed during the period? B. What amount should be capitalized during the period?
An examination of Buckhorn Fabricators records reveals the following transactions: a. On December 31, the physical inventory of raw material was 9,950 gallons. The book quantity, using the weighted average method, was 10,000 gal @ .52 per gal. b. Production returned to the storeroom materials that cost 775. c. Materials valued at 770 were charged to Factory Overhead (Repairs and Maintenance), but should have been charged to Work in Process. d. Defective material, purchased on account, was returned to the vendor. The material returned cost 234. e. Goods sold to a customer, on account, for 5,000 (cost 2,500) were returned because of a misunderstanding of the quantity ordered. The customer stated that the goods returned were in excess of the quantity needed. f. Materials requisitioned totaled 22,300, of which 2,100 represented supplies used. g. Materials purchased on account totaled 25,500. Freight on the materials purchased was 185. h. Direct materials returned to the storeroom amounted to 950. i. Scrap materials sent to the storeroom were valued at an estimated selling price of 685 and treated as a reduction in the cost of all jobs worked on during the period. j. Spoiled work sent to the storeroom valued at a sales price of 60 had production costs of 200 already charged to it. The cost of the spoilage is to be charged to the specific job worked on during the period. k. The scrap materials in (i) were sold for 685 cash. Required: Record the entries for each transaction.
Godwin Co. owns three delivery trucks. Details for each truck at the end of the most recent year follow: At the beginning of the year, a hydraulic lift is added to Truck 1 at a cost of 4,500. The addition of the hydraulic lift will allow the company to deliver much larger objects than could previously be delivered. At the beginning of the year, the engine of Truck 2 is overhauled at a cost of 5,000. The engine overhaul will extend the trucks useful life by three years. Write a short memo to Godwins chief financial officer explaining the financial statement effects of the expenditures associated with Trucks 1 and 2.
St. Johns Medical Center (SJMC) has five medical technicians who are responsible for conducting cardiac catheterization testing in SJMCs Cath Lab. Each technician is paid a salary of 36,000 and is capable of conducting 1,000 procedures per year. The cardiac catheterization equipment is one year old and was purchased for 250,000. It is expected to last five years. The equipments capacity is 25,000 procedures over its life. Depreciation is computed on a straight-line basis, with no salvage value expected. The reading of the catheterization results is conducted by an outside physician whose fee is 120 per test. The technicians report with the outside physicians note of results is sent to the referring physician. In addition to the salaries and equipment, SJMC spends 50,000 for supplies and other costs needed to operate the equipment (assuming 5,000 procedures are conducted). When SJMC purchased the equipment, it fully expected to perform 5,000 procedures per year. In fact, during its first year of operation, 5,000 procedures were run. However, a larger hospital has established a clinic in the city and will siphon off some of SJMCs business. During the coming years, SJMC expects to run only 4,200 cath procedures yearly. SJMC has been charging 850 for the procedureenough to cover the direct costs of the procedure plus an assignment of general overhead (e.g., depreciation on the hospital building, lighting and heating, and janitorial services). At the beginning of the second year, an HMO from a neighboring community approached SJMC and offered to send its clients to SJMC for cardiac catheterization provided that the charge per procedure would be 550. The HMO estimates that it can provide about 500 patients per year. The HMO has indicated that the arrangement is temporaryfor one year only. The HMO expects to have its own testing capabilities within one year. Required: 1. Classify the resources associated with the cardiac catheterization activity into one of the following: (1) committed resources, or (2) flexible resources. 2. Calculate the activity rate for the cardiac catheterization activity. Break the activity rate into fixed and variable components. Now, classify each activity resource as relevant or irrelevant with respect to the following alternatives: (1) accept the HMO offer, or (2) reject the HMO offer. Explain your reasoning. 3. Assume that SJMC will accept the HMO offer if it reduces the hospitals operating costs. Should the HMO offer be accepted? 4. Jerold Bosserman, SJMCs hospital controller, argued against accepting the HMOs offer. Instead, he argued that the hospital should be increasing the charge per procedure rather than accepting business that doesnt even cover full costs. He also was concerned about local physician reaction if word got out that the HMO was receiving procedures for 550. Discuss the merits of Jerolds position. Include in your discussion an assessment of the price increase that would be needed if the objective is to maintain total revenues from cardiac catheterizations experienced in the first year of operation. 5. Chandra Denton, SJMCs administrator, has been informed that one of the Cath Lab technicians is leaving for an opportunity at a larger hospital. She met with the other technicians, and they agreed to increase their hours to pick up the slack so that SJMC wont need to hire another technician. By working a couple hours extra every week, each remaining technician can perform 1,050 procedures per year. They agreed to do this for an increase in salary of 2,000 per year. How does this outcome affect the analysis of the HMO offer? 6. Assuming that SJMC wants to bring in the same revenues earned in the cardiac catheterization activitys first year less the reduction in resource spending attributable to using only four technicians, how much must SJMC charge for a procedure?
Johnson, Incorporated had the following transactions during the year: Purchased a building for $5,000,000 using a mortgage for financing Paid $2,000 for ordinary repair on a piece of equipment Sold product on account to customers for $1,500,600 Purchased a copyright for $5,000 cash Paid $20,000 cash to add a storage shed in the corner of an existing building Paid $360,000 in monthly salaries Paid $25,000 for routine maintenance on equipment Paid $110,000 for major repairs If all transactions were recorded properly, what amount did Johnson capitalize for the year, and what amount did Johnson expense for the year?
Ellerson Company provided the following information for the last calendar year: During the year, direct materials purchases amounted to 278,000, direct labor cost was 189,000, and overhead cost was 523,000. During the year, 100,000 units were completed. Refer to Exercise 2.21. Last calendar year, Ellerson recognized revenue of 1,312,000 and had selling and administrative expenses of 204,600. Required: 1. What is the cost of goods sold for last year? 2. Prepare an income statement for Ellerson for last year.
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On March 1, Bartholomew Company purchased a new stamping machine with a list price of $88,000. The company paid cash for the machine; therefore, it was allowed a 5% discount. Other costs associated with the machine were: transportation costs, $3100; sales tax paid, $6,720, installation costs, $1,900; routine maintenance during the first month of operation, $3,000. The cost recorded for the machine was:
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