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mote1985 [20]
3 years ago
10

Kramer company started its production operations on August 1st. During August, the printing Department completed 17,600 units. T

here were 4,400 units in ending inventory which were 80% complete with respect to materials and 10% complete with respect to conversion cost. during August, the department accumulated materials cost of 45408 and conversion cost of 76,6700. Required:
a) calculate the cost of the goods transferred out.
b) what is the value of the ending inventory?
Business
1 answer:
Dima020 [189]3 years ago
7 0

Answer:

Costs of goods transferred out is  $ 785,840

Value of ending inventory is  $26,268

Explanation:

The equivalent units of material cost is computed thus:

Completed units  17600*100% =17,600

Ending inventory 4,400*80%    =3,520

Equivalent units                           21,120

material unit cost =Accumulated materials cost/equivalent units

material unit cost=$45,408/21,120

                            =$2.15

Equivalent units of conversion cost is calculated thus:

Completed units 17,600*100%= 17,600

Ending inventory 4,400*10%  =      440

Equivalent units                         18,040

Conversion unit cost=Conversion costs/equivalent units

                                   =$766,700/18,040

                                   =$42.5

Cost of goods transferred out:

Material costs  17,600*100%*$2.15       =$37,840

Conversion costs 17,600*100%*$42.5 =$ 748,000

Total costs                                                $ 785,840

Costs of ending inventory:

Material costs 4,400*80%*$2.15                = $7,568

Conversion costs 4,400*10%*$42.5           =$18,700

Total cost                                                        $26,268

                                   =

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Answer:

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1. Journal Entries:

1. January 1, 2013,

Debit Capital Projects Fund $1,000,000

Credit General Obligation Bonds Payable $1,000,000

To record the issuance of bonds, payable in 20 equal semiannual installments of $50,000 over a 10-year period commencing October 1, 2013, with interest of 4 percent per annum paid on the outstanding debt.

2. May 1,

Debit Capital Projects Fund $20,000

Credit General Fund $20,000

To fund the additional project costs.

3. July 1

Debit Construction of Community Center $1,020,000

Credit Capital Projects Fund $1,020,000.

To record the payment to the contractors for completed construction of Community Center with estimated 20 years useful life.

4. September 30, 2013

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Credit General Fund $70,000

To transfer funds for debt service.

5. October 1:

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Debit Interest on Bonds Expense $20,000

Credit Debt Service Fund $70,000

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Payment of debt service and interest $70,000

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Investment in capital assets, $1,020,000

Related debt                              (850,000)

Invested capital assets, net      $170,000

Explanation:

a) Data and Analysis:

1. January 1, 2013, Capital Projects Fund $1,000,000 General Obligation Bonds Payable $1,000,000

2. May 1, Capital Projects Fund $20,000 General Fund $20,000

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5. October 1, Bonds Payable $50,000 Interest on Bonds Expense $20,000 ($1,000,000 * 4% * 6/12) Debt Service Fund $70,000

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