Blue Co. both purchases and constructs various equipment it uses in its operations. The following items for two different types ofequipment were recorded in random order during the calendar year 2020.PurchaseCash paid for equipment, including sales tax of $6,400Freight and insurance cost while in transit$134,4002,560Cost of moving equipment into place at factory3,968Wage cost for technicians to test equipment5,120Insurance premium paid during first year of operation on this equipment1,920Special plumbing fixtures required for new equipment10,240Repair cost incurred in first year of operations related to this equipment1,664ConstructionMaterial and purchased parts (gross cost $256,000; failed to take 2% cash discount)Imputed interest on funds used during construction (stock financing)$256,00017,920Labor costs243,200Allocated overhead costs (fixed-$25,600; variable-$38,400)Profit on self-constructionCost of installing equipment64,00038,4005,632Compute the total cost to be capitalized for each of these two pieces of equipment.Purchase equipment$Construction equipment$

The objective of the question is to calculate the total cost to be capitalized for two pieces of…

Answered: Blue Co. both purchases and constructs…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Use indirect method. Indus industries was manufacturing steel rods and it has reported net income of P225, 000 for 2019. It also reported depreciation expense of P45,000 and a loss of 5,000 on the disposal of equipment. The comparative balance sheet shows a decrease in accounts receivable of 15,000 for the year, a 17,000 increase in accounts payable, and a 4,000 decrease in prepaid expenses. Prepare the operating activities section of the statement of cash flows for 2019.
The Rosie Company (a VAT-registered company) paid P231,840, inclusive of 12% value added tax, to buy an equipment. Other costs incurred relating to this equipment are as follows: freight and insurance cost while in transit, P7,500; cost of moving equipment into place at factory P1,900; fees paid to technician for testing cost, P3,500; special plumbing fixtures required for new equipment, P2,800;Insurance paid during the first year of operation, P2,700; Maintenance cost incurred during first year of operation, P2,800. Determine the cost of acquisition of the Equipment.
Carla Engineering Corporation purchased conveyor equipment with a list price of $9,200. Presented below are three independent cases related to the equipment. (a) Carla paid cash for the equipment 8 days after the purchase. The vendor’s credit terms are 2/10, n/30. Assume that equipment purchases are initially recorded gross. (b) Carla traded in equipment with a book value of $2,200 (initial cost $7,400), and paid $9,800 in cash one month after the purchase. The old equipment could have been sold for $300 at the date of trade. (The exchange has commercial substance.) (c) Carla gave the vendor a $11,000 zero-interest-bearing note for the equipment on the date of purchase. The note was due in one year and was paid on time. Assume that the effective-interest rate in the market was 9%. Prepare the general journal entries required to record the acquisition and payment in each of the independent cases above. (Round present value factor calculations to 5 decimal places, e.g.…
Quick Producers acquired factory equipment on March 1 of Year 1 costing $39,000 . In view of pending technological developments, it is estimated that the equipment will have an $8,000 resale value upon disposal in four years and that disposal costs will be $500. Data relating to the equipment follow. Estimated Service Life Years 4 Service hours 20,000 Calendar Year Actual Service Hours Year 1 4,700 Year 2 5,000 Year 3 4,800 Year 4 4,400 Year 5 1,000 Required Compute depreciation expense each year for the life of the asset assuming (1) units-of-production, (2) straight-line, (3) sum-of-the-years’-digits, and (4) double-declining-balance depreciation.●Note: Round depreciation expense to the nearest whole dollar 1. Units-of-Production●Note: Do not use negative signs with any of your answers. Numerator Denominator Result Depreciation per Unit Answer ÷ Answer = ●Note: Use the result EXACTLY as displayed above in the calculations…
Gadubhai
On August 15, MJC Company purchased new equipment for $91,500 by paying cash. Other costs associated with the equipment were: transportation costs, $2,100; sales tax paid, $7,500; and installation cost, $4,800. At what amount will the equipment be recorded on a balance sheet? Multiple Choice $105,900. $98,400. $99,000. $93,600.
7. Champion Contractors completed the following transactions involving equipment. Year 1 January 1 Paid $322,000 cash plus $12,880 in sales tax and $1,800 in transportation (FOB shipping point) for a new loader. The loader is estimated to have a four-year life and a $32,200 salvage value. Loader costs are recorded in the Equipment account. January 3 Paid $5,000 to install air conditioning in the loader to enable operations under harsher conditions. This increased the estimated salvage value of the loader by another $1,500. December 31 Recorded annual straight-line depreciation on the loader. Year 2 January 1 Paid $4,200 to overhaul the loader’s engine, which increased the loader’s estimated useful life by two years. February 17 Paid $1,050 for minor repairs to the loader after the operator backed it into a tree. December 31 Recorded annual straight-line depreciation on the loader. Required:Prepare journal entries to record these transactions and events.
Wildhorse Company incurs these expenditures in purchasing a truck: cash price $46,000, accident insurance (during use) $2,200, sales taxes $4,400, motor vehicle license $300, and painting and lettering $1,700 What is the cost of the truck? Cost of the truck $
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