E11-10 Double-declining-balance method; switch to straight line
On January 2, 2011, the Jackson Company purchased equipment to be used in its manufacturing process. The equipment has an estimated life of eight years and an estimated residual value of $30,625. The expenditures made to acquire the asset were as follows:
Purchase price $154,000
Freight charges 2,000
Installation charges 4,000
Jackson's policy is to use the double-declining-balance (DDB) method of depreciation in the early years of the equipment's life and then switch to straight line halfway through the equipment's life.
Required:
1. Calculate depreciation for each year of the asset's eight-year life.
2. Discuss the accounting treatment of the depreciation on the equipment.
Click here for the solution: On January 2, 2011, the Jackson Company purchased equipment to be used in its manufacturing process
Showing posts with label process. Show all posts
Showing posts with label process. Show all posts
Friday, April 15, 2016
Wednesday, April 13, 2016
Allen Labinski has prepared the following list of statements about process cost accounting
E3-1 Allen Labinski has prepared the following list of statements about process cost accounting. Identify each statement as true or false. If false, indicate how to correct the statement.
1. Process cost systems are used to apply costs to similar products that are mass-produced in a continuous fashion.
2. A process cost system is used when each finished unit is indistinguishable from another.
3. Companies that produce soft drinks, motion pictures, and computers chips would all use process cost accounting.
4. In a process cost system, costs are tracked by individual jobs.
5. Job order costing and process costing track different manufacturing costs elements.
6. Both job order costing and process costing account for direct materials, direct labor, and manufacturing overhead.
7. Costs flow through the accounts in the same basic way for both job order costing and process costing.
8. In a process cost system, only one work in process account is used.
9. In a process cost system, costs are summarized in a job cost sheet.
10. In a process cost system, the unit cost is total manufacturing costs for the period divided by the units produced during the period.
NOTE: Fill in the table below with your responses; write correction for false statements below the table:
Click here for the solution: Allen Labinski has prepared the following list of statements about process cost accounting
1. Process cost systems are used to apply costs to similar products that are mass-produced in a continuous fashion.
2. A process cost system is used when each finished unit is indistinguishable from another.
3. Companies that produce soft drinks, motion pictures, and computers chips would all use process cost accounting.
4. In a process cost system, costs are tracked by individual jobs.
5. Job order costing and process costing track different manufacturing costs elements.
6. Both job order costing and process costing account for direct materials, direct labor, and manufacturing overhead.
7. Costs flow through the accounts in the same basic way for both job order costing and process costing.
8. In a process cost system, only one work in process account is used.
9. In a process cost system, costs are summarized in a job cost sheet.
10. In a process cost system, the unit cost is total manufacturing costs for the period divided by the units produced during the period.
NOTE: Fill in the table below with your responses; write correction for false statements below the table:
Click here for the solution: Allen Labinski has prepared the following list of statements about process cost accounting
Monday, October 26, 2015
Container Shipping, Inc. is contemplating the use of process costing to track the cost of its operations
ACC 560 Week 2 Assignment
E3-14 Container Shipping, Inc. is contemplating the use of process costing to track the cost of its operations. The operation consists of three segments (departments): receiving, shipping, and delivery. Containers are received at Container's docks and sorted according to the ship they will be carried on. The containers are then loaded onto a ship, which carries them to the appropriate port of destination. The containers are then off-loaded and delivered to the receiving company. Container shipping wants to begin to use process costing in the shipping department. Direct materials represent the fuel costs to run the ship, and "Containers in transit" represents work in process. Listed below is information about the shipping department's first month's activity.
Containers in Transit April 1 0
Containers loaded 800
Containers in Transit April 30 350 40% of direct materials and
30% of conversion costs
Determine the physical flow of containers for the month
Compute the equivalent units for direct materials and conversion costs
Click here for the solution: Container Shipping, Inc. is contemplating the use of process costing to track the cost of its operations
E3-14 Container Shipping, Inc. is contemplating the use of process costing to track the cost of its operations. The operation consists of three segments (departments): receiving, shipping, and delivery. Containers are received at Container's docks and sorted according to the ship they will be carried on. The containers are then loaded onto a ship, which carries them to the appropriate port of destination. The containers are then off-loaded and delivered to the receiving company. Container shipping wants to begin to use process costing in the shipping department. Direct materials represent the fuel costs to run the ship, and "Containers in transit" represents work in process. Listed below is information about the shipping department's first month's activity.
Containers in Transit April 1 0
Containers loaded 800
Containers in Transit April 30 350 40% of direct materials and
30% of conversion costs
Determine the physical flow of containers for the month
Compute the equivalent units for direct materials and conversion costs
Click here for the solution: Container Shipping, Inc. is contemplating the use of process costing to track the cost of its operations
Monday, October 5, 2015
Benson, Inc. produces three separate products from a common process costing $100,000
ACC 560 Week 5 Assignment
E7-8 Benson, Inc. produces three separate products from a common process costing $100,000. Each of the products can be sold at the split-off point or can be processed further and then sold for a higher price. Shown below are cost and selling price data for a recent period.
Sales Value at Split-off Point Cost to Process Further Sales Value After Further Processing
Product 12 $50,000 $100,000 $190,000
Product 14 10,000 30,000 35,000
Product 16 60,000 150,000 220,000
a. Determine total net income if all products are sold at the split-off point.
b. Determine total net income if all products are sold after further processing.
c. Using incremental analysis, determine which products should be sold at the split-off point and which should be processed further.
d. Determine total net income using the results from the previous part of the question.
Click here for the solution: Benson, Inc. produces three separate products from a common process costing $100,000
E7-8 Benson, Inc. produces three separate products from a common process costing $100,000. Each of the products can be sold at the split-off point or can be processed further and then sold for a higher price. Shown below are cost and selling price data for a recent period.
Sales Value at Split-off Point Cost to Process Further Sales Value After Further Processing
Product 12 $50,000 $100,000 $190,000
Product 14 10,000 30,000 35,000
Product 16 60,000 150,000 220,000
a. Determine total net income if all products are sold at the split-off point.
b. Determine total net income if all products are sold after further processing.
c. Using incremental analysis, determine which products should be sold at the split-off point and which should be processed further.
d. Determine total net income using the results from the previous part of the question.
Click here for the solution: Benson, Inc. produces three separate products from a common process costing $100,000
Friday, September 25, 2015
What is the process of analyzing accounts receivable and classifying by how old the due dates are?
1. What is the process of analyzing accounts receivable and classifying by how old the due dates are?
2. What is the name of the expense used to track receivable accounts estimated to be uncollectible?
3. Name one method used to estimate Bad Debts.
4. Name another method used to estimate Bad Debts.
5. Name the receivable created when customers are issued a formal, written document including specific terms of payment.
6. In what section on the Balance Sheet would Accounts Receivable be located?
7. What kind of account is Allowance for Doubtful Accounts?
8. Accounts Receivable should be collected in about how many days?
9. What is the name of the expense used to record the usage of fixed assets?
10. What is the name of the expense used to record the periodic write off of the cost of intangible assets?
11. What is the name of the expense used to record the utilization of natural resources?
12. Name the most popular depreciation method used by businesses today.
13. What kind of account is Accumulated Depreciation?
14. Is Land depreciated, yes or no?
15. Name one of the payroll taxes paid by employers.
16. Name another one of the payroll taxes paid by employers.
17. Name yet another one of the payroll taxes paid by employers.
18. What kind of account is Interest Payable?
19. Gross Wages LESS Deductions EQUAL what?
20. Do employees have contributions deducted from their paychecks for federal and state unemployment, yes or no?
KEY INFORMATION: On 3/5/07, our company, ABC Textbooks, Inc., borrows $150,000 from the First Bank & Trust. The terms of the note are 90-days at 8%.
21. What is the maturity date of the note?
22. – 23. What is the amount of total interest on this note?
24. – 25. What is the maturity value of the note?
#2: Record journal entries in the general journal below for Jax-Mart. Sample accounts include: Accounts Receivable, Allowance for Doubtful Accounts, Sales, Cash, Uncollectible Accounts Expense, and Notes Receivable. DO NOT ABBREVIATE.
1/2/07 Using the analysis of receivables method, write off Mr. Jones account of $585. His bankruptcy settlement was just completed. (3 points)
11/25/07 Mr. Jones paid his $585 balance in full. Record the journal entry to reinstate his account, and then record the cash receipt. (2 entries required)
12/31/07 Using the analysis of receivables method, record the provision for estimated uncollectible accounts at the end of the year at 10% with receivables of $175,000. Note that the balance in Allowance for Doubtful Accounts has a credit balance of $2000 before this journal entry.
12/31/07 - Now trying using a different method. Using the percent of sales method, record the provision for estimated uncollectible accounts at the end of the year, at 1% with sales of $1,500,000
#3: Instructions: Compute depreciation expense for two years using 3 different methods using the following information. Show all work for maximum points!!!:
• Machinery was acquired on the first day of the current year for $420,000
• The estimated useful life is 5 years or 40,000 hours
• The residual value is estimated at $20,000
• During year one, the machinery was used for 11,500 hours
• During year two, the machinery was used for 17,000 hours
METHOD YEAR ONE YEAR TWO
Straight Line (3 points)
Units of Production (6 points)
Double Declining Balance (6 points)
Click here for the solution: What is the process of analyzing accounts receivable and classifying by how old the due dates are?
2. What is the name of the expense used to track receivable accounts estimated to be uncollectible?
3. Name one method used to estimate Bad Debts.
4. Name another method used to estimate Bad Debts.
5. Name the receivable created when customers are issued a formal, written document including specific terms of payment.
6. In what section on the Balance Sheet would Accounts Receivable be located?
7. What kind of account is Allowance for Doubtful Accounts?
8. Accounts Receivable should be collected in about how many days?
9. What is the name of the expense used to record the usage of fixed assets?
10. What is the name of the expense used to record the periodic write off of the cost of intangible assets?
11. What is the name of the expense used to record the utilization of natural resources?
12. Name the most popular depreciation method used by businesses today.
13. What kind of account is Accumulated Depreciation?
14. Is Land depreciated, yes or no?
15. Name one of the payroll taxes paid by employers.
16. Name another one of the payroll taxes paid by employers.
17. Name yet another one of the payroll taxes paid by employers.
18. What kind of account is Interest Payable?
19. Gross Wages LESS Deductions EQUAL what?
20. Do employees have contributions deducted from their paychecks for federal and state unemployment, yes or no?
KEY INFORMATION: On 3/5/07, our company, ABC Textbooks, Inc., borrows $150,000 from the First Bank & Trust. The terms of the note are 90-days at 8%.
21. What is the maturity date of the note?
22. – 23. What is the amount of total interest on this note?
24. – 25. What is the maturity value of the note?
#2: Record journal entries in the general journal below for Jax-Mart. Sample accounts include: Accounts Receivable, Allowance for Doubtful Accounts, Sales, Cash, Uncollectible Accounts Expense, and Notes Receivable. DO NOT ABBREVIATE.
1/2/07 Using the analysis of receivables method, write off Mr. Jones account of $585. His bankruptcy settlement was just completed. (3 points)
11/25/07 Mr. Jones paid his $585 balance in full. Record the journal entry to reinstate his account, and then record the cash receipt. (2 entries required)
12/31/07 Using the analysis of receivables method, record the provision for estimated uncollectible accounts at the end of the year at 10% with receivables of $175,000. Note that the balance in Allowance for Doubtful Accounts has a credit balance of $2000 before this journal entry.
12/31/07 - Now trying using a different method. Using the percent of sales method, record the provision for estimated uncollectible accounts at the end of the year, at 1% with sales of $1,500,000
#3: Instructions: Compute depreciation expense for two years using 3 different methods using the following information. Show all work for maximum points!!!:
• Machinery was acquired on the first day of the current year for $420,000
• The estimated useful life is 5 years or 40,000 hours
• The residual value is estimated at $20,000
• During year one, the machinery was used for 11,500 hours
• During year two, the machinery was used for 17,000 hours
METHOD YEAR ONE YEAR TWO
Straight Line (3 points)
Units of Production (6 points)
Double Declining Balance (6 points)
Click here for the solution: What is the process of analyzing accounts receivable and classifying by how old the due dates are?
Sunday, September 13, 2015
On September 25, 2010 a hurricane destroyed the work in process inventory of Biloxi Corporation
Cost Accounting Foundations and Evolutions 8e Kinney and Raiborn
On September 25, 2010 a hurricane destroyed the work in process inventory of Biloxi Corporation. At the time, the company was in the process of manufacturing two custom jobs (B325 and Q428). Although all of Biloxi’s on site accounting records were destroyed, the following information is available from some backup off site records.
• Biloxi Corp. applies overhead at the rate of 85 percent of direct labor cost.
• The cost of goods sold for the company average 75 percent of selling price. Sales from January 1 to the date of the hurricane totaled 1,598,000.
• The company wages rate for production employees is $12.90 per hour. A total 25,760 direct labor hours were recorded from January 1 through September 25.
• As of September 25, $21,980 of direct material and 128 hours of direct labor had been recorded for Job B325. Also at that time, $14,700 of direct material and 240 hours of direct labor had been recorded for Job Q428.
• As of January 1, 2010, inventories were follows $19,500 of Raw Material and $68,900 of Finished Goods. Raw Materials purchased during 2010 totaled $843,276.
• The amount of Work in Process Inventory at January 1, 2010 was $14,600. Jobs B325 and Q428 were not in process on January 1.
• One job, R91, was completed and in the warehouse awaiting shipment on September 25. The total cost of this job was $165,600.
Determine the following amounts:
a. Cost of goods sold for the year
b. Cost of goods manufactured during the year
c. Amount of applied overhead for each job in WIP Inventory
d. Cost of WIP Inventory destroyed by the hurricane
e. Cost of RM Inventory destroyed by the hurricane.
Click here for the solution: On September 25, 2010 a hurricane destroyed the work in process inventory of Biloxi Corporation
On September 25, 2010 a hurricane destroyed the work in process inventory of Biloxi Corporation. At the time, the company was in the process of manufacturing two custom jobs (B325 and Q428). Although all of Biloxi’s on site accounting records were destroyed, the following information is available from some backup off site records.
• Biloxi Corp. applies overhead at the rate of 85 percent of direct labor cost.
• The cost of goods sold for the company average 75 percent of selling price. Sales from January 1 to the date of the hurricane totaled 1,598,000.
• The company wages rate for production employees is $12.90 per hour. A total 25,760 direct labor hours were recorded from January 1 through September 25.
• As of September 25, $21,980 of direct material and 128 hours of direct labor had been recorded for Job B325. Also at that time, $14,700 of direct material and 240 hours of direct labor had been recorded for Job Q428.
• As of January 1, 2010, inventories were follows $19,500 of Raw Material and $68,900 of Finished Goods. Raw Materials purchased during 2010 totaled $843,276.
• The amount of Work in Process Inventory at January 1, 2010 was $14,600. Jobs B325 and Q428 were not in process on January 1.
• One job, R91, was completed and in the warehouse awaiting shipment on September 25. The total cost of this job was $165,600.
Determine the following amounts:
a. Cost of goods sold for the year
b. Cost of goods manufactured during the year
c. Amount of applied overhead for each job in WIP Inventory
d. Cost of WIP Inventory destroyed by the hurricane
e. Cost of RM Inventory destroyed by the hurricane.
Click here for the solution: On September 25, 2010 a hurricane destroyed the work in process inventory of Biloxi Corporation
Thursday, September 10, 2015
Stockman Co. began 2010 with three jobs in process
Stockman Co. began 2010 with three jobs in process:
Type of Cost
Job No. Direct Material Direct Labor Overhead Total
247 $77,200 $91,400 36,560 $205,160
251 176,600 209,800 83,920 470,320
253 145,400 169,600 67,840 382,840
Totals $399,200 $470,800 $188,320 $1,058,320
During 2010, the following transactions occurred:
1. The firm purchased and paid for $542,000 of raw material.
Factory payroll records revealed the following:
- Indirect labor incurred was $54,000.
- Direct labor incurred was $602,800 and was associated with the jobs as follows:
Job No. Direct Labor Cost
247 $ 17,400
251 8,800
253 21,000
254 136,600
255 145,000
256 94,600
257 179,400
3. Material requistion forms issued during the year revealed the following:
- Indirect material issued totaled $ 76,000
- Direct material issued totaled $ 466,400 and was associated with jobs follows:
Job No. Direct Material Cost 247 $ 12,400
251 6,200
253 16,800
254 105,200
255 119,800
256 72,800
257 133,200
4. Overhead is applied to jobs on the basis of direct labor cost. Managment budgeted overhead of $ 240,000 and total direct labor cost of $ 600,000 for 2010. Actual total factory overhead costs ( including indirect labor and indirect material for the year totaled $ 244,400.
5. Jobs #247 through #255 were completed and delivered to customers, who paid for the goods in cash. The revenue on these jobs was $ 2,264,774.
a. Journalize all preceding events.
b. Determine the ending balances for the jobs still in process.
c. Determine the cost of jobs sold, adjusted for underapplied or oveapplied overhead.
Click here for the solution: Stockman Co. began 2010 with three jobs in process
Type of Cost
Job No. Direct Material Direct Labor Overhead Total
247 $77,200 $91,400 36,560 $205,160
251 176,600 209,800 83,920 470,320
253 145,400 169,600 67,840 382,840
Totals $399,200 $470,800 $188,320 $1,058,320
During 2010, the following transactions occurred:
1. The firm purchased and paid for $542,000 of raw material.
Factory payroll records revealed the following:
- Indirect labor incurred was $54,000.
- Direct labor incurred was $602,800 and was associated with the jobs as follows:
Job No. Direct Labor Cost
247 $ 17,400
251 8,800
253 21,000
254 136,600
255 145,000
256 94,600
257 179,400
3. Material requistion forms issued during the year revealed the following:
- Indirect material issued totaled $ 76,000
- Direct material issued totaled $ 466,400 and was associated with jobs follows:
Job No. Direct Material Cost 247 $ 12,400
251 6,200
253 16,800
254 105,200
255 119,800
256 72,800
257 133,200
4. Overhead is applied to jobs on the basis of direct labor cost. Managment budgeted overhead of $ 240,000 and total direct labor cost of $ 600,000 for 2010. Actual total factory overhead costs ( including indirect labor and indirect material for the year totaled $ 244,400.
5. Jobs #247 through #255 were completed and delivered to customers, who paid for the goods in cash. The revenue on these jobs was $ 2,264,774.
a. Journalize all preceding events.
b. Determine the ending balances for the jobs still in process.
c. Determine the cost of jobs sold, adjusted for underapplied or oveapplied overhead.
Click here for the solution: Stockman Co. began 2010 with three jobs in process
Tuesday, September 8, 2015
BIKE Company starts with $3,000 cash to finance its business plan to produce bike helmets with a simple assembly process
Understanding Revenue Recognition
For this assignment, turn to page 364 in your textbook (Chapter 6 of Financial Statements Analysis), and complete Case 6-1, Understanding Revenue Recognition.
BIKE Company starts with $3,000 cash to finance its business plan to produce bike helmets with a simple assembly process. During the first month of business the company signs sales contracts for 1,300 units (sales price of $9 per unit), produces 1,200 units (production cost of $7 per unit), ships 1,100 units, and collects in full for 900 units. Production costs are paid at the time of production. The company has only two other costs:
This is the entire problem. Do you think it will be completed by tonight? Sorry but i need it by then.
1. Commission of 10% of the selling price when the company collects from the customer;
2. Shipping costs of $0.20 per unit paid at time of shipment. Selling price and all costs per unit have been constant and are likely to remain the same.
A. Prepare comprehensive (side by side) balance sheets and income statements for the first month of BIKE Company for each of the following three alternatives:
1. Revenue is recognized at the time of shipment
2. Revenue is recognized at the time of collection
3. Revenue is recognized at the time of production
Note: net income for each of the three alternatives is (1) $990, (2) $810, and (3) $1080 respectively.
B. The method where revenue is recognized at the time of collection, known as the installment method, is except the bull for financial reporting in unusual and special cases. Why is BIKE Company likely to prefer this method for tax purposes? (one line simple answer)
C. Comment on the usefulness of the installment method for a credit analyst is using both the balance sheet and income statement.
Click here for the solution: BIKE Company starts with $3,000 cash to finance its business plan to produce bike helmets with a simple assembly process
For this assignment, turn to page 364 in your textbook (Chapter 6 of Financial Statements Analysis), and complete Case 6-1, Understanding Revenue Recognition.
BIKE Company starts with $3,000 cash to finance its business plan to produce bike helmets with a simple assembly process. During the first month of business the company signs sales contracts for 1,300 units (sales price of $9 per unit), produces 1,200 units (production cost of $7 per unit), ships 1,100 units, and collects in full for 900 units. Production costs are paid at the time of production. The company has only two other costs:
This is the entire problem. Do you think it will be completed by tonight? Sorry but i need it by then.
1. Commission of 10% of the selling price when the company collects from the customer;
2. Shipping costs of $0.20 per unit paid at time of shipment. Selling price and all costs per unit have been constant and are likely to remain the same.
A. Prepare comprehensive (side by side) balance sheets and income statements for the first month of BIKE Company for each of the following three alternatives:
1. Revenue is recognized at the time of shipment
2. Revenue is recognized at the time of collection
3. Revenue is recognized at the time of production
Note: net income for each of the three alternatives is (1) $990, (2) $810, and (3) $1080 respectively.
B. The method where revenue is recognized at the time of collection, known as the installment method, is except the bull for financial reporting in unusual and special cases. Why is BIKE Company likely to prefer this method for tax purposes? (one line simple answer)
C. Comment on the usefulness of the installment method for a credit analyst is using both the balance sheet and income statement.
Click here for the solution: BIKE Company starts with $3,000 cash to finance its business plan to produce bike helmets with a simple assembly process
Wednesday, September 2, 2015
Analytical procedures are an important part of the audit process and consist of the evaluation of financial information
Auditing P 8-31 Analytical procedures are an important part of the audit process and consist of the evaluation of financial information by the study of plausible relationships among financial and nonfinancial data. Analytical procedures may be done during planning, as a substantive test, or as a part of the overall review of an audit.
The following are various statements regarding the use of analytical procedures:
1. Not required during this stage.
2. Should focus on enhancing the auditor’s understanding of the client’s business and the transactions and events that have occurred since the last audit date.
3. Should focus on identifying areas that may represent specific risks relevant to the audit.
4. Do not result in detection of misstatements.
5. Designed to obtain evidential matter about particular assertions related to account balances or classes of transactions.
6. Generally use data aggregated at a lower level than the other stages.
7. Should include reading the financial statements and notes to consider the adequacy of evidence gathered.
8. Involve reconciliation of confirmation replies with recorded book amounts.
9. Use the preliminary or unadjusted working trial balance as a source of data.
10. Expected to result in a reduced level of detection risk.
Required
For each of the 10 statements, select the stage of the audit for which the statement is most accurate using the following responses:
1. Planning the audit
2. Substantive testing
3. Overall review
4. Statement is not correct concerning analytical procedures.*
Click here for the solution: Analytical procedures are an important part of the audit process and consist of the evaluation of financial information
The following are various statements regarding the use of analytical procedures:
1. Not required during this stage.
2. Should focus on enhancing the auditor’s understanding of the client’s business and the transactions and events that have occurred since the last audit date.
3. Should focus on identifying areas that may represent specific risks relevant to the audit.
4. Do not result in detection of misstatements.
5. Designed to obtain evidential matter about particular assertions related to account balances or classes of transactions.
6. Generally use data aggregated at a lower level than the other stages.
7. Should include reading the financial statements and notes to consider the adequacy of evidence gathered.
8. Involve reconciliation of confirmation replies with recorded book amounts.
9. Use the preliminary or unadjusted working trial balance as a source of data.
10. Expected to result in a reduced level of detection risk.
Required
For each of the 10 statements, select the stage of the audit for which the statement is most accurate using the following responses:
1. Planning the audit
2. Substantive testing
3. Overall review
4. Statement is not correct concerning analytical procedures.*
Click here for the solution: Analytical procedures are an important part of the audit process and consist of the evaluation of financial information
Tuesday, August 18, 2015
On January 1, 2008, Pele Company purchased the following two machines for use in its production process
On January 1, 2008, Pele Company purchased the following two machines for use in its production process.
Machine A: The cash price of this machine was $38,000. Related expenditures included: sales tax $1,700, shipping costs $150, insurance during shipping $80, installation and testing costs $70, and $100 of oil and lubricants to be used with the machinery during its first year of operations. Pele estimates that the useful life of the machine is 5 years with a $5,000 salvage value remaining at the end of that time period. Assume that the straight-line method of depreciation is used.
Machine B: The recorded cost of this machine was $160,000. Pele estimates that the useful life of the machine is 4 years with a $10,000 salvage value remaining at the end of that time period.
Instructions
(a) Prepare the following for Machine A.
(1) The journal entry to record its purchase on January 1, 2008.
(2) The journal entry to record annual depreciation at December 31, 2008.
(b) Calculate the amount of depreciation expense that Pele should record for machine B each year of its useful life under the following assumptions.
(1) Pele uses the straight-line method of depreciation.
(2) Pele uses the declining-balance method. The rate used is twice the straight-line rate.
(3) Pele uses the units-of-activity method and estimates that the useful life of the machine is 125,000 units. Actual usage is as follows: 2008, 45,000 units; 2009, 35,000 units; 2010, 25,000 units; 2011, 20,000 units
Click here for the solution: On January 1, 2008, Pele Company purchased the following two machines for use in its production process
Machine A: The cash price of this machine was $38,000. Related expenditures included: sales tax $1,700, shipping costs $150, insurance during shipping $80, installation and testing costs $70, and $100 of oil and lubricants to be used with the machinery during its first year of operations. Pele estimates that the useful life of the machine is 5 years with a $5,000 salvage value remaining at the end of that time period. Assume that the straight-line method of depreciation is used.
Machine B: The recorded cost of this machine was $160,000. Pele estimates that the useful life of the machine is 4 years with a $10,000 salvage value remaining at the end of that time period.
Instructions
(a) Prepare the following for Machine A.
(1) The journal entry to record its purchase on January 1, 2008.
(2) The journal entry to record annual depreciation at December 31, 2008.
(b) Calculate the amount of depreciation expense that Pele should record for machine B each year of its useful life under the following assumptions.
(1) Pele uses the straight-line method of depreciation.
(2) Pele uses the declining-balance method. The rate used is twice the straight-line rate.
(3) Pele uses the units-of-activity method and estimates that the useful life of the machine is 125,000 units. Actual usage is as follows: 2008, 45,000 units; 2009, 35,000 units; 2010, 25,000 units; 2011, 20,000 units
Click here for the solution: On January 1, 2008, Pele Company purchased the following two machines for use in its production process
Tuesday, July 7, 2015
Pretty Lady Cosmetic Products has an average productions process time of forty days
Pretty Lady Cosmetic Products has an average productions process time of forty days. Finished goods are kept on hand for an average of fifteen days before they are sold. Accounts receivable are outstanding an average of thirty-five days, and the firm receives forty days of credit on its purchases from supplies.
a. Estimate the average length of the firm’s short-term operating cycle. How often would the cycle turn over in a year?
b. Assume net sales of $1,200,000 and cost of goods sold of $900,000. Determine the average investment in accounts receivable, inventories, and accounts payable. What would be the net financing need considering only these three accounts?
Click here for the solution: Pretty Lady Cosmetic Products has an average productions process time of forty days
a. Estimate the average length of the firm’s short-term operating cycle. How often would the cycle turn over in a year?
b. Assume net sales of $1,200,000 and cost of goods sold of $900,000. Determine the average investment in accounts receivable, inventories, and accounts payable. What would be the net financing need considering only these three accounts?
Click here for the solution: Pretty Lady Cosmetic Products has an average productions process time of forty days
Saturday, June 27, 2015
Tiana Shar, the controller for Bondi Furniture Company, is in the process of analyzing the overhead costs for the month of November
Tiana Shar, the controller for Bondi Furniture Company, is in the
process of analyzing the overhead costs for the month of November. She
has gathered the following data for the month. Labor: Direct Labor Hours
Job 77: 3,500 Job 78: 3,000 Job 79: 2,000 Labor Cost: Direct-Labor
Wages: $204,000 Indirect-Labor Wages: 15,000 Supervisory Salaries:6,000
Material: Inventories, November 1: Raw Materials and Supplies: $10,500
Work in Progress (job 77): 54,000 Finished goods: 112,500 Purchases of
raw material and supplies: Raw Material: $135,000 Supplies (indirect
material): 15,000 Direct material and Supplies requisitioned for
production Job 77: $45,000 Job 78: 37,500 Job 79: 25,500 Supplies
(indirect material): 12,000 Total: $120,000 Other Building occupancy
cost (heat, light, depreciation, etc) Factory Facilites: $6,400 Sales
Offices: 1,600 Administrative Offices: 1,000 Total: $9,000 Production
equipment costs: Power:$4,100 Repairs and maintenance: 1,500
Depreciation: 1,500 Other: 1,000 Total: $8,100 The firms job order
costing system uses direct labor hours as the cost driver for overhead
application. In december of the preceeding year. Shar has prepared the
following budget for direct labor and manufacturing overhead costs for
the current year. the plant is capable of operating at 150,000 direct
labor hours per year. However, Shar estimates that the normal usage is
120,000 hours in a typical year. Manufacturing Overhead Direct Labor
Hours Variable Fixed 100,000 $325,000 $216,000 120,000 390,000 216,000
140,000 455,000 216,000 During November the following jobs were
completed: Job 77: side chairs Job 78: end tables
1. Calculate the predetermined overhead rate for the entire year.
2. Calculate the total cost of job 77.
3. Compute the amount of manufacturing overhead applied to job 79 during November.
4. What was the total amount of manufacturing overhead applied during November?
5. Compute the actual manufacturing overhead incurred during November.
6. Calculate the overapplied or underapplied overhead for November.
Click here for the solution: Tiana Shar, the controller for Bondi Furniture Company, is in the process of analyzing the overhead costs for the month of November
1. Calculate the predetermined overhead rate for the entire year.
2. Calculate the total cost of job 77.
3. Compute the amount of manufacturing overhead applied to job 79 during November.
4. What was the total amount of manufacturing overhead applied during November?
5. Compute the actual manufacturing overhead incurred during November.
6. Calculate the overapplied or underapplied overhead for November.
Click here for the solution: Tiana Shar, the controller for Bondi Furniture Company, is in the process of analyzing the overhead costs for the month of November
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