Explain about the initial direct costs.

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Answer 1

Question

Chapter 20, Problem 2C

1.

To determine

Explain about the initial direct costs.

2.

To determine

Explain the manner Company E should account for initial direct costs if given lease is (a) an operating lease, (b) a sales-type lease, and (c) a direct financing lease.

3.

To determine

Explain that for the given provision require that initial direct costs for sales-type lease be charged to goods sold. Explain the reasons and accounting treatment.

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Coronado Fire, Inc. manufactures steel cylinders and nozzles for two models of fire extinguishers: (1) a home fire extinguisher and (2) a commercial fire extinguisher. The home model is a high-volume (54,000 units), half-gallon cylinder that holds 2 1/2 pounds of multi- purpose dry chemical at 480 PSI. The commercial model is a low-volume (10,200 units), two-gallon cylinder that holds 10 pounds of multi-purpose dry chemical at 390 PSI. Both products require 1.5 hours of direct labor for completion. Therefore, total annual direct labor hours are 96,300 or [1.5 hours x (54,000+10,200)]. Estimated annual manufacturing overhead is $1,566,090. Thus, the predetermined overhead rate is $16.26 or ($1,566,090 ÷ 96,300) per direct labor hour. The direct materials cost per unit is $18.50 for the home model and $26.50 for the commercial model. The direct labor cost is $19 per unit for both the home and the commercial models. The company's managers identified six activity cost pools and related…

Coronado Fire, Inc. manufactures steel cylinders and nozzles for two models of fire extinguishers: (1) a home fire extinguisher and (2) a commercial fire extinguisher. The home model is a high-volume (54,000 units), half-gallon cylinder that holds 2 1/2 pounds of multi- purpose dry chemical at 480 PSI. The commercial model is a low-volume (10,200 units), two-gallon cylinder that holds 10 pounds of multi-purpose dry chemical at 390 PSI. Both products require 1.5 hours of direct labor for completion. Therefore, total annual direct labor hours are 96,300 or [1.5 hours x (54,000+ 10,200)]. Estimated annual manufacturing overhead is $1,566,090. Thus, the predetermined overhead rate is $16.26 or ($1,566,090 ÷ 96,300) per direct labor hour. The direct materials cost per unit is $18.50 for the home model and $26.50 for the commercial model. The direct labor cost is $19 per unit for both the home and the commercial models. The company's managers identified six activity cost pools and related…

The completed Payroll Register for the February and March biweekly pay periods is provided, assuming benefits went into effect as anticipated. Required: Using the payroll registers, complete the General Journal entries as follows: February 10 Journalize the employee pay. February 10 Journalize the employer payroll tax for the February 10 pay period. Use 5.4 percent SUTA and 0.6 percent FUTA. No employees will exceed the FUTA or SUTA wage base. February 14 Issue the employee pay. February 24 Journalize the employee pay. February 24 Journalize the employer payroll tax for the February 24 pay period. Use 5.4 percent SUTA and 0.6 percent FUTA. No employee will exceed the FUTA or SUTA wage base. February 28 Issue the employee pay. February 28 Issue payment for the payroll liabilities. March 10 Journalize the employee pay. March 10 Journalize the employer payroll tax for the March 10 pay period. Use 5.4 percent SUTA and 0.6 percent FUTA. No employees will exceed the FUTA or SUTA wage base.…

Answer 2

Question

Chapter 20, Problem 2C

1.

To determine

Explain about the initial direct costs.

2.

To determine

Explain the manner Company E should account for initial direct costs if given lease is (a) an operating lease, (b) a sales-type lease, and (c) a direct financing lease.

3.

To determine

Explain that for the given provision require that initial direct costs for sales-type lease be charged to goods sold. Explain the reasons and accounting treatment.

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Answer 3

Question

Chapter 20, Problem 2C

1.

To determine

Explain about the initial direct costs.

2.

To determine

Explain the manner Company E should account for initial direct costs if given lease is (a) an operating lease, (b) a sales-type lease, and (c) a direct financing lease.

3.

To determine

Explain that for the given provision require that initial direct costs for sales-type lease be charged to goods sold. Explain the reasons and accounting treatment.

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Answer 4

Question

Chapter 20, Problem 2C

1.

To determine

Explain about the initial direct costs.

2.

To determine

Explain the manner Company E should account for initial direct costs if given lease is (a) an operating lease, (b) a sales-type lease, and (c) a direct financing lease.

3.

To determine

Explain that for the given provision require that initial direct costs for sales-type lease be charged to goods sold. Explain the reasons and accounting treatment.

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Answer 5

Chapter 20, Problem 2C

1.

To determine

Explain about the initial direct costs.

2.

To determine

Explain the manner Company E should account for initial direct costs if given lease is (a) an operating lease, (b) a sales-type lease, and (c) a direct financing lease.

3.

To determine

Explain that for the given provision require that initial direct costs for sales-type lease be charged to goods sold. Explain the reasons and accounting treatment.

Answer 6

Chapter 20, Problem 2C

1.

To determine

Explain about the initial direct costs.

Answer 7

Chapter 20, Problem 2C

1.

To determine

Explain about the initial direct costs.

Answer 8

2.

To determine

Explain the manner Company E should account for initial direct costs if given lease is (a) an operating lease, (b) a sales-type lease, and (c) a direct financing lease.

Answer 9

2.

To determine

Explain the manner Company E should account for initial direct costs if given lease is (a) an operating lease, (b) a sales-type lease, and (c) a direct financing lease.

Answer 10

3.

To determine

Explain that for the given provision require that initial direct costs for sales-type lease be charged to goods sold. Explain the reasons and accounting treatment.

Answer 11

3.

To determine

Explain that for the given provision require that initial direct costs for sales-type lease be charged to goods sold. Explain the reasons and accounting treatment.

Answer 12

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Answer 13

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Answer 14

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Answer 15

Ch. 20 - Prob. 1GI Ch. 20 - What is the difference between the lessee and...Ch. 20 - Prob. 3GI Ch. 20 - Prob. 4GI Ch. 20 - Prob. 5GI Ch. 20 - Prob. 6GI Ch. 20 - What are the two types of lease classifications...Ch. 20 - Prob. 8GI Ch. 20 - Prob. 9GI Ch. 20 - Prob. 10GI

Explain about the initial direct costs.

Solution Summary: The author explains the accounting treatment of initial direct costs for different types of leases.

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Explain about the initial direct costs.

Explain the manner Company E should account for initial direct costs if given lease is (a) an operating lease, (b) a sales-type lease, and (c) a direct financing lease.

Explain that for the given provision require that initial direct costs for sales-type lease be charged to goods sold. Explain the reasons and accounting treatment.

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