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AnnyKZ [126]
3 years ago
5

On March 1, Squire Company purchased a new stamping machine with a list price of $24,000. The company paid cash for the machine;

therefore, it was allowed a 3% discount. Other costs associated with the machine were: transportation costs, $550; sales tax paid, S1,680; installation costs, $450; routine maintenance during the first month of operation, $500. The cost recorded for the machine was:A. $23,730
B. $24,000
C. $25,960
D. $26,680
Business
2 answers:
Nikitich [7]3 years ago
5 0

Answer:

C. $25,960

Explanation:

Cost of asset includes all the cost involved to acquire and install the asset. In simple term all the costs that are necessary to make the asset usable are capitalised and added to the cost of the asset.

In this question stamping machine has following cost which need to be capitalised.

Discounted Price = $24,000 x ( 100% - 3% ) = $24,000 x 97% = $23,280

Transportation cost = $550

Sales Tax = $1,680

Installation cost = $450

Total cost to be capitalized = $23,280 + $550 + $1,680 + $450 = $25,960

Routine Maintenance cost is the routine / period cost which incur every month, It is not necessary to make the asset usable and it is incurred after the asset is used.

Ilia_Sergeevich [38]3 years ago
5 0

Answer:

C. $25,960

Explanation:

The cost of an asset includes all cos incurred in making the asset available for use. These includes the cost of the item net all discounts, sales tax, freight cost etc.

As long as the cost is necessary for the asset to be available for use, such cost will be capitalized with the cost of the item of asset. Other cost such as maintenance, insurance costs are expensed and not considered as a part of the cost of the asset.

Hence, the cost recorded for the machine

= (100 -3)% *$24,000 + $550 + $1,680 + $450

= $25,960

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The sticky-wage theory of the short-run aggregate supply curve says that the quantity of output firms supply will increase if
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a.the price level is higher than expected making production more profitable.

Explanation:

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7 0
3 years ago
Lynwood, Inc. produces two different products (Product A and Product X) using two different activities: Machining, which uses ma
Murljashka [212]

Answer:

$434,000

Explanation:

Total machining cost = Number of machine hour * Rate per machine hour

= 3,100 * $140

= $434,000

Hence, The total machining cost allocated to product X is $434,000.​

5 0
3 years ago
Fisk Corporation is trying to improve its inventory control system and has installed an online computer at its retail stores. Fi
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Answer:

Please consider the following explanation

Explanation:

a.   EOQ = 560 units

b.  58800 units/560 units = 105 orders

c. EOQ/2 = 560/2 = 280 units (average inventory)

d.  105 orders × $4 ordering cost = $ 420

280 units × $1.50 carrying cost per unit =  420

Total costs = $840

8 0
3 years ago
The following data relate to the accounts of Edmiston Company. a. Unpaid salaries and wages at year end amount to $750. b. Edmis
AVprozaik [17]

Answer:

a. Debit  Salaries and wages expense   $750

   Credit Accrued Salaries and wages   $750

Being entries to record accrued salaries and wages

b. Debit Interest receivable $600

   Credit Interest income     $600

Being entries to record interest earned

c. Debit Insurance expense $350

   Credit Prepaid Insurance  $350

Being entries to record insurance expense

d. Debit Service revenue  $900

   Credit Unearned Service revenue  $900

Being entries to record unearned revenue

e. Debit Supplies expense  $1,500

   Credit Supplies account   $1,500

Being entries to record supplies expense

Explanation:

When salaries are incurred but yet to be paid, the expense has to be recorded with a corresponding liability known as accrued expense. When interest is earned but yet to be paid, it has to be recognized as a credit to the income statement and a debit to the balance sheet.

When insurance is paid in advance, the entries required are  

Debit Prepaid Insurance

Credit Cash account

As time elapses and the insurance expires,

Debit Insurance expense

Since payment was for 2 years, period elapsed as at December 31, 2017 is 7 months hence amount of expense

= 7/24 * $1,200

= $350

When a fee is received in advance for a service yet to be rendered, the revenue for such fee is said to be unearned. The entries required are

Debit Cash account and Credit Unearned fees or deferred revenue.

As the service is performed and the revenue is earned, debit Unearned fees and credit revenue.

When Supplies is purchased, Debit supplies and credit Cash/Accounts payable. As Supplies are used up, debit supplies expense (with the amount used) and Credit Supplies account.

Amount of supplies used

= $2500 - $1000

= $1,500

4 0
2 years ago
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