Bridgeport 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 $7,400 $155,400Freight and insurance cost while in transit 2,960Cost of moving equipment into place at factory 4,588Wage cost for technicians to test equipment 5,920Insurance premium paid during first year of operation on this equipment 2,220Special plumbing fixtures required for new equipment 11,840Repair cost incurred in first year of operations related to this equipment 1,924 Construction Material and purchased parts (gross cost $296,000; failed to take 2% cash discount) $296,000Imputed interest on funds used during construction (stock financing) 20,720Labor costs 281,200Allocated overhead costs (fixed-$29,600; variable-$44,400) 74,000Profit on self-construction 44,400Cost of installing equipment 6,512Compute 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

Capitalization Capitalization means treating a cost as a part of an asset instead of recording the…

Answered: Compute the total cost to be…

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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Bridgeport 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 $7,400		$155,400
Freight and insurance cost while in transit		2,960
Cost of moving equipment into place at factory		4,588
Wage cost for technicians to test equipment		5,920
Insurance premium paid during first year of operation on this equipment		2,220
Special plumbing fixtures required for new equipment		11,840
Repair cost incurred in first year of operations related to this equipment		1,924

Construction
Material and purchased parts (gross cost $296,000; failed to take 2% cash discount)		$296,000
Imputed interest on funds used during construction (stock financing)		20,720
Labor costs		281,200
Allocated overhead costs (fixed-$29,600; variable-$44,400)		74,000
Profit on self-construction		44,400
Cost of installing equipment		6,512

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

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