Question

On March 15, 20X7, Barrel Company paid property taxes of $120,000 on its factory building for calendar year 20X7. On July 1, 20X7, Barrel made $20,000 in unanticipated repairs to its machinery. The repairs will benefit operations for the remainder of the calendar year. What total amount of these expenses should be included in Barrel's quarterly income statement for the three months ended September 30, 20X7?

Answer 1

Answer:

Total expenses = $40,000

Explanation:

Total expenses for the quarterly income statement for the three months can be calculated as follows

Data

Property taxes paid = $120,000

Unanticipated repairs = $20,000

Expenses for quarterly income statement =?

Solution

Total expenses = Property taxes paid + Unanticipated repairs

Total expenses = ($120,000 x 3/12) + ($20,000 x 3/6)

Total expenses = $30,000 + $10,000

Total expenses = $40,000

Total expenses of $40,000 should be included in Barrel's quarterly income statement for the three months ended September 30, 20X7