On December 31, 2020, Scarce Company showed the followingaccount for machinery that it has assembled for own use.MachineryCash proceeds from saleof old machineCost of dismantling old machine 20,000Raw materials usedLabor in constructionCost of installationMaterials spoiled in trial runProfit on constructionPurchase of machine tools14,000600,000400,000 | Depreciation for 202060,00030,000100,00090,00010% of P1,286,000 128,600An analysis of the details in the account disclosed the following:1. The old machine, which was removed in the installation ofthe new one had been fully depreciated.2. The discount received on the payment of materials used inconstruction totaled P40,000 and this was reported in thepurchase discount account.3. The factory overhead account shows a balance of P2,500,000for the year ended December 31, 2020. This balance exceedsnormal overhead on plant activities by P150,000 and isattributable to machine construction.4. A profit was recognized on construction for the differencebetween cost incurred and the price at which the machinecould have been purchased.5. Machine tools have a useful life of 3 years.6. Machinery has a useful life of 10 years and was used forproduction beginning September 1, 2020.Required:a. Determine the cost of the machinery.b. Prepare journal entries to adjust the machinery account onDecember 31, 2020.

Journal entries refers to the process of recording the financial transactions in the accounting…

On December 31, 2020, Scarce Company showed account for machinery that it has assembled for own use. he owing Machinery Cost of dismantling old machine 20,000 Cash proceeds from sale Raw materials used Labor in construction Cost of installation Materials spoiled in trial run Profit on construction Purchase of machine tools 14,000 600,000 of old machine 400,000 Depreciation for 2020 60,000 30,000 100,000 90,000 10% of P1,286,000 128,600

On December 31, 2020, Scarce Company showed account for machinery that it has assembled for own use. he owing Machinery Cost of dismantling old machine 20,000 Cash proceeds from sale Raw materials used Labor in construction Cost of installation Materials spoiled in trial run Profit on construction Purchase of machine tools 14,000 600,000 of old machine 400,000 Depreciation for 2020 60,000 30,000 100,000 90,000 10% of P1,286,000 128,600

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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