4th Edition

ISBN: 9781337690881

Author: Jay Rich, Jeff Jones

Publisher: Cengage Learning

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Chapter 7, Problem 33BE

Expenditures After Acquisition

Listed below are several transactions:

a. Paid $80 cash to replace a minor part of an air conditioning system.

b. Paid $40,000 to fix structural damage to a building.

c. Paid $8,000 for monthly salaries.

d. Paid $12,000 to replace a manual cutting machine with a computer-controlled machine.

e. Paid $1,000 related to the annual painting of a building.

Required:

Classify each transaction as either a revenue expenditure, a capital expenditure, or neither.

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Chapter 7, Problem 32BE

Chapter 7, Problem 34BE

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S hyne Incorporated calculates cost for an equivalent unit of production using the FIFO method. Data for July: Work-in-process inventory, July 1 (39,000 units): Direct materials (94% completed) $ 122,700 Conversion (56% completed) 77,150 Balance in work in process inventory, July 1 $ 199,850 Units started during July 93,000 Units completed and transferred 107,700 Work-in-process inventory, July 31: Direct materials (94% completed) 24,300 Conversion (56% completed) Cost incurred during July: Direct materials $ 183,000 Conversion costs 291,000 Cost per equivalent unit for conversion under the FIFO method is calculated to be:

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Chapter 7 Solutions

Cornerstones of Financial Accounting

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Solution Summary: The author explains that the Company's decision to capitalize or expense off these expenditures is to classify the transactions as revenue or capital expenditure or neither.

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