Answer:
Debit Depreciation Expense, $525;
Credit Accumulated Depreciation, $525.
Explanation:
Based on the information given in a situation where the financial statements are to be prepared on December 31, which means that the company should make the following adjusting entry:
Debit Depreciation Expense, $525
Credit Accumulated Depreciation, $525
Calculated as:
Debit depreciation expense $6,300/12
Debit depreciation expense=$525
Answer:
Stuart Manufacturing Company
Assets = $107,200
Explanation:
a) Data and Calculations:
Cash Account
Common stock $89,000
Furniture (32,000)
Equipment (40,000)
Salaries (12,000)
Wages (21,000)
Raw materials (26,000)
Sales 72,000
Cash balance $30,000
Inventory:
Cost = $26,000
Units produced = 10,000 units
Cost per unit = $2.60 ($26,000/10,000)
Cost of goods sold = 8,000 * $2.60 = $20,800
Ending inventory = 2,000 * $2.60 = $5,200
Sales Revenue = 8,000 * $9 = $72,000
Assets:
Cash $30,000
Ending inventory 5,200
Furniture 32,000
Equipment 40,000
Total $107,200
b) An asset is something that brings in future cash flows to the business entity. It is made up of Cash and Cash Equivalents, Inventories, Property, Plant, Equipment, and other business investments. Assets are funded from finance provided by creditors and the equity owners, and they generate economic values.
Answer:
Replacing the old machine would produce a net saving of $1,300
The sunk cost in this situation is the purchase cost (i.e $105,000) of the old machine.
Explanation:
<em>Differential Analysis</em>
Purchase cost of the new machine (83,000)
Savings from annual variable cost(8500×8) 68,000
Variable cost of running the new machine (5,000×8) (40,000)
Scrap value of the old machine <u> 56,300 </u>
Differential savings <u> 1,300 </u>
Replacing the old machine would produce a net saving of $1,300
The sunk cost in this situation is the purchase cost (i.e $105,000) of the old machine. It is a past cost incurred as a result old decision.
