Vaughn Co. both purchases and constructs various equipment it uses in its operations. The following items for two different types of equipment were recorded in random order during the calendar year 2020.Purchase Cash paid for equipment, including sales tax of $5,700 $119,700Freight and insurance cost while in transit 2,280Cost of moving equipment into place at factory 3,534Wage cost for technicians to test equipment 4,560Insurance premium paid during first year of operation on this equipment 1,710Special plumbing fixtures required for new equipment 9,120Repair cost incurred in first year of operations related to this equipment 1,482 Construction Material and purchased parts (gross cost $228,000; failed to take 2% cash discount) $228,000Imputed interest on funds used during construction (stock financing) 15,960Labor costs 216,600Allocated overhead costs (fixed-$22,800; variable-$34,200) 57,000Profit on self-construction 34,200Cost of installing equipment 5,016Compute the total cost to be capitalized for each of these two pieces of equipment.Purchase equipment $enter a dollar amountConstruction equipment $enter a dollar amount

Solution : Answer- Cost of purchase equipment =$139194. Explanation- Cost of purchase equipment =…

Answered: Cash paid for equipment, including…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Question

Vaughn Co. both purchases and constructs various equipment it uses in its operations. The following items for two different types of equipment were recorded in random order during the calendar year 2020.

Purchase
Cash paid for equipment, including sales tax of $5,700		$119,700
Freight and insurance cost while in transit		2,280
Cost of moving equipment into place at factory		3,534
Wage cost for technicians to test equipment		4,560
Insurance premium paid during first year of operation on this equipment		1,710
Special plumbing fixtures required for new equipment		9,120
Repair cost incurred in first year of operations related to this equipment		1,482

Construction
Material and purchased parts (gross cost $228,000; failed to take 2% cash discount)		$228,000
Imputed interest on funds used during construction (stock financing)		15,960
Labor costs		216,600
Allocated overhead costs (fixed-$22,800; variable-$34,200)		57,000
Profit on self-construction		34,200
Cost of installing equipment		5,016

Compute the total cost to be capitalized for each of these two pieces of equipment.

Purchase equipment		$enter a dollar amount
Construction equipment		$enter a dollar amount

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Accounting for Property, Plant and Equipment

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions