Valix Finacc vol 1 Problem 16-17

Financial Accounting Volume 1 2008 Valix-Peralta

Chapter 16 Problem 16-17

1. Materials                                                                                                                600,000

    Labor                                                                                                                      400,000

    Installation                                                                                                               60,000

    Trial run                                                                                                                    30,000

    Discount                                                                                                          (      40,000)

    Overhead                                                                                                              150,000

                                                                                                                                1,200,000

2. Adjusting entries:

    1. Loss on retirement of old machinery                                              6,000

               Machinery (20,000 – 14,000)                                                                           6,000

                                                                                                            215

    2. Purchase discount                                                                        40,000

               Machinery                                                                                                      40,000

    3. Machinery                                                                                    150,000            

               Factory overhead                                                                                        150,000

    4. Profit on construction                                                                 100,000

               Machinery                                                                                                    100,000

                                                                                                                                                     

    5. Tools                                                                                               90,000

               Machinery                                                                                                      90,000

    6. Depreciation – tools                                                                      10,000

               Tools (90,000 / 3 x 4/12)                                                                                  10,000

                                                                                                                                                        

    7. Machinery                                                                                    128,600

               Accumulated depreciation                                                             40,000

               Depreciation – machinery                                                                             88,600

        Depreciation recorded                                                                                      128,600

        Correct depreciation (1,200,000 / 10 x 4/12)                                                        40,000

        Overdepreciation                                                                                                 88,600Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 16 Problem 16-17