Principles of Cost Accounting
17th Edition
ISBN: 9781305087408
Author: Edward J. Vanderbeck, Maria R. Mitchell
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Videos
Textbook Question
Chapter 6, Problem 16E
Espana Co. makes one main product, Uno, and a by-product, Dos, which splits off from the main product when the work is three-fourths completed. Dos is sold without further processing and without being placed in stock. During June, $1,200 is realized from the sale of the by-product.
Make the entries to record the recovery and sale of the by-product, on account, on the assumption that the recovery is treated as one of the following:
- a. A reduction in the cost of the main product
- b. Other income
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Legend Company sold $87,000 worth of goods on account to Destiny Inc. on June 20. It cost Legend
$60,900 to make these goods. Destiny has 30 days to return the goods for any reason. On July 1, Destiny
returns $8,000 worth of goods that had cost Legend $5,600. Legend expects to be able to resell these
goods for a profit.
Prepare the following entries on the books of Legend Company:
Journal entries to record the initial sales on June 20 if a perpetual inventory system is used
Shaw company sells good that cost 600,000 to Charm company for 800,000 on January 2, 20x5. the sales price includes an installation fee, which is valued at 80,000. the fair value of the goods is 740,000. the installation is considered a separate performance obligation and is expected to take 6 months to complete.
Prepare the journal entries to record the sale on January 2, 20x5.
Shaw prepares income statement for the first quarter of 20x5, ending March 31, 20x5 (installation was completed on June 18, 20x5). How much revenue should Shaw recognize related to its sale to Charm?
Levchenko Company purchased inventories from a vendor for $16,000 on July 1. The purchase was financed through a $10,000 note with the remainder paid in cash. The vendor charged an additional $400 for
shipping, on account. Levchenko paid a moving company $700 cash to move the inventory to a different warehouse. Interest on the note totaled $50, payable in August.
a. Determine the cost to be assigned to the inventory. $
b. Record the transactions using the financial statement effects template.
Note: Use negative signs with your answers, when appropriate. Select "N/A" as your answer if a part of the accounting equation is not affected.
Transaction
a. Inventory purchase
b. Shipping charge
c. Moving cost
d. Interest incurred
Totals
Cash Asset
♦
◆
◆
◆
0
+
Noncash
Asset
◆
◆
◆
◆
0
Balance Sheet
Liabilities
◆
◆
◆
0
Contributed
+ Capital +
Earned
Capital
♦
◆
♦
♦
0
Revenues
Income Statement
Expenses
◆
◆
◆
0
Net
= Income
0
Chapter 6 Solutions
Principles of Cost Accounting
Ch. 6 - Under what conditions may the unit costs of...Ch. 6 - When is it necessary to use separate equivalent...Ch. 6 - Why is it usually reasonable to assume that labor...Ch. 6 - If materials are not put into process uniformly,...Ch. 6 - In what way do the cost of production summaries in...Ch. 6 - Why might the total number of units completed...Ch. 6 - What is the usual method of handling the cost of...Ch. 6 - If some units are normally lost during the...Ch. 6 - How is the cost of units normally lost reflected...Ch. 6 - Prob. 10Q
Ch. 6 - What adjustment must be made if materials added in...Ch. 6 - What is the difference between the unit costs are...Ch. 6 - What advantage does the FIFO cost method have over...Ch. 6 - How would you define each of the following? a....Ch. 6 - What are three methods of allocating joint costs?
Ch. 6 - Prob. 16QCh. 6 - Prob. 17QCh. 6 - Using the data given for Cases 13 below, and...Ch. 6 - Precision Inc. manufactures wristwatches on an...Ch. 6 - The following data appeared in the accounting...Ch. 6 - Conte Chemical Co. uses the weighted average cost...Ch. 6 - Assuming that all materials are added at the...Ch. 6 - Foamy Inc. manufactures shaving cream and uses the...Ch. 6 - Calculating unit costs; units lost in production...Ch. 6 - Sonoma Products Inc. manufactures a liquid product...Ch. 6 - A company manufactures a liquid product called...Ch. 6 - Using the data given for Cases 1–3 and the FIFO...Ch. 6 - Assume each of the following conditions concerning...Ch. 6 - Adirondack Bat Co. processes rough timber to...Ch. 6 - Computing joint costssales value at split-off and...Ch. 6 - LeMoyne Manufacturing Inc.’s joint cost of...Ch. 6 - Making a journal entryby-product Petrone Metals...Ch. 6 - Espana Co. makes one main product, Uno, and a...Ch. 6 - Manufacturing data for January and February in the...Ch. 6 - Manufacturing data for June and July in the...Ch. 6 - On December 1, Carmel Valley Production Inc. had a...Ch. 6 - Akron Manufacturing Co. manufactures a...Ch. 6 - Green Products Inc. cans peas and uses the...Ch. 6 - Monterrey Products Co. uses the process cost...Ch. 6 - Prob. 7PCh. 6 - Daytona Beverages Inc. uses the FIFO cost method...Ch. 6 - Clearwater Candy Co. had a cost per equivalent...Ch. 6 - Mt. Palomar Manufacturing Co. uses a process cost...Ch. 6 - Otto Inc. specializes in chicken farming. Chickens...Ch. 6 - Otto Inc. specializes in chicken farming. Chickens...Ch. 6 - Venezuela Oil Inc. transports crude oil to its...Ch. 6 - Clark Kent Inc. buys crypton for $.80 a gallon. At...
Additional Business Textbook Solutions
Find more solutions based on key concepts
Interest-bearing notes payable with year-end adjustments P1 Keesha Co. borrows $200,000 cash on November 1, 201...
Financial Accounting: Information for Decisions
Analysis of inventory errors A2 Hallam Company’s financial statements show the following. The company recently ...
FINANCIAL ACCT.FUND.(LOOSELEAF)
For each of the following transactions, state which special journal (Sales Journal, Cash Receipts Journal, Cash...
Principles of Accounting Volume 1
BE1-7 Indicate which statement you would examine to find each of the following items: income statement (IS), ba...
Financial Accounting: Tools for Business Decision Making, 8th Edition
Place the letter of the appropriate accounting cost in Column 2 in the blank next to each decision category in ...
Fundamentals of Cost Accounting
How is activity-based costing useful for pricing decisions?
Cost Accounting (15th Edition)
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Clark Kent Inc. buys crypton for $.80 a gallon. At the end of processing in Dept. 1, crypton splits off into products plutonium, tantalum, and xenon. Plutonium is sold at the split-off point with no further processing. Tantalum and xenon require further processing before they can be sold. Tantalum is processed in Dept. 2, and xenon is processed in Dept. 3. Following is a summary of costs and other related data for the year ended December 31: No inventories were on hand at the beginning of the year, and no crypton was on hand at the end of the year. All gallons on hand at the end of the year were complete as to processing. Kent uses the net realizable value method of allocating joint costs. Required: Calculate the allocation of joint costs. Calculate the total cost per unit for each product. In examining the product cost reports, Lois Lane, Vice President—Marketing, notes that the per-unit cost of tantalum is greater than the selling price of $2.75 that can be received in the competitive marketplace. Lane wonders whether they should stop selling tantalum. How did Lane determine that the product was being sold at a loss? What per unit cost should be used in determining whether tantalum should be sold?arrow_forwardMarkson and Sons leases a copy machine with terms that include a fixed fee each month of $500 plus a charge for each copy made. The company uses the high-low method to analyze costs. If Markson paid $360 for 5,000 copies and $280 for 3,000 copies, how much would Markson pay if it made 7,500 copies?arrow_forwardThe following transactions occurred for Surfer Paradise Ltd (SPL), a raw materials supplier, during October of the current year (all the amounts ALREADY include GST): A large customer made a purchase of $660,000 from SPL, agreeing terms of 3/15, n/30. Oct 1 SPL's cost of goods sold for this transaction was $400,000. Discovering that he had ordered too much, the customer returned $220,000 of the products he had bought on 1st Oct. Oct 4 SPL accepted the sales return and placed the goods back into the warehouse as inventory (SPL's cost of goods, $150,000) Oct 13 The customer paid off the outstanding amount owed to SPL for the 1st Oct purchase. Required: Now, as the accountant for Surfer Paradise Ltd (SPL), Journalise the above transactions, accounting for GST. Assume that the firm uses the perpetual inventory system and that there was no opening inventory. (Explanations not required)arrow_forward
- During April, Firestone purchased-goods from BF Goodrich. The sequence of events was as follows: April 1: Firestone orders 2,500 tires from BF Goodrich. BF Goodrich agrees to sell the wheels for $200 each on account under shipping terms FOB shipping point and payment terms 5/10, n45. The tires initially cost BF Goodrich $125 each on February 17th. J.B. Hunt Trucking Company will be responsible for transporting the inventory for $2,125. All shipping costs must be paid on the day of shipment. April 4: BF Goodrich loads the 2,500 tires into JB Hunt's truck. April 8: Firestone receives the shipment of tires. April 25: Firestone pays BF Goodrich for the tires previously purchased. A Accounts Payable Cash B Cash 500,000 500,000 Accounts Receivable 500,000 Event April 1 April 4 April 8 April 25 500,000 Buyer Inventory Seller Accounts Payable C Inventory Cash Accounts Receivable Sales Revenue 500,000 D Cost of Goods Sold Inventory 2,125 500,000 2,125 500,000 500,000 Required: For each Buyer…arrow_forwardBramble Corp. began the year with 10 units of marine floats at a cost of $12 each. During the year, it made the following purchases: May 5, 32 unit at $16; July 16, 19 units at $20; and December 7, 24 units at $23. Assume there are 35 units on hand at the end of the period. Bramble uses the periodic approach. (a) Determine the cost of goods sold under FIFO. FIFO Cost of good soldarrow_forwardBlossom Corporation shipped $21,900 of merchandise on consignment to Cullumber Company. Blossom paid freight costs of $2,100. Cullumber Company paid $550 for local advertising, which is reimbursable from Blossom. By year-end, 65% of the merchandise had been sold for $21,900. Cullumber notified Blossom, retained a 10% commission, and remitted the cash due to Blossom. Prepare Blossom's journal entry when the cash is received. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter O for the amounts. List all debit entries before credit entries.) Account Titles and Explanation (To record the cash remitted to Blossom.) (To record the cost of inventory sold on consignment.) Debit 11 Credit 1arrow_forward
- Novak Corp. began the year with 8 units of marine floats at a cost of $11 each. During the year, it made the following purchases: May 5, 34 unit at $16; July 16, 17 units at $21; and December 7, 22 units at $25. Assume there are 29 units on hand at the end of the period. Novak uses the periodic approach. Determine the cost of goods sold under LIFO:arrow_forwardKrux sends its mobiles amounting P2,400 each to their customers on Sale on Return basis. These are treated like actual sales and recorded through the Sales Day Book. Two months before the end of financial year it sent 300 mobiles at an Invoice Price of P3,000 each, of which 40 mobiles are accepted by customers at P2,800 each. Rest of the goods sent no further report is available. Prepare necessary entries at the end of the accounting year for Krux mobiles.arrow_forwardFrom July 1 to August 30, 2020, Busy Beaver Ltd. completed the following transactions:On July 1, Busy Beaver sold 40 computers at a unit price of $3,000 to Heintoch Corp., terms1/15, n/30. Average cost for these computers was $1,500. Busy Beaver also paid the freightcosts of $3,200 cash. On July 5, Heintoch Corp. returned for full credit three damagedcomputers from the July 1 shipment. These were not returned to inventory. Heintoch agreedto pay the $240 freight cost to return the computers to Busy Beaver. On July 10, Busy Beaverreceived payment from Heintoch for the full amount owed from the July transactions. On July14, Busy Beaver purchased 50 computers on account from Correl Computers Ltd. for $1,500per unit plus freight for $4,000. On July 17, Busy Beaver sold $224,000 in computers andperipherals to Perkins Store, terms 1.5/10, n/30. Cost for these computers was $112,000. OnJuly 26, Perkins Store paid Busy Beaver for half of its July purchases. On August 30, PerkinsStore paid Busy…arrow_forward
- On June 1, Entity A sold Product XX2 for P50,000 with a cost price of P30,000. Credit terms is 2/10, n/30. On June 15, P10,000 worth of Product XX2 was received due to wrong specifications. The buyer availed of the discount period and paid on June 10. What is the gross profit of Entity A for Product XX2?arrow_forwardO’Connor Company ordered a machine on January 1 at a purchase price of $40,000. On the date ofdelivery, January 2, the company paid $10,000 on the machine and signed a Iong-term note payablefor the balance. On January 3, it paid $350 for freight on the machine. On January 5, O’Connor paidcash for installation costs relating to the machine amounting to $2,400. On December 31 (the endof the accounting period), O’Connor recorded depreciation on the machine using the straight-linemethod with an estimated useful life of 10 years and an estimated residual value of $4,750.Required:1. Indicate the effects (accounts, amounts, and 1 or 2 ) of each transaction (on January 1, 2, 3,and 5) on the accounting equation. Use the following schedule:Date Assets 5 Liabilities 1 Stockholders’ Equity2. Compute the acquisition cost of the machine.3. Compute the depreciation expense to be reported for the first year.4. What should be the book value of the machine at the end of the second year?arrow_forwardor each of the separate revenue contract scenarios 1 through 5, (a) measure the transaction price and (b) determine whether the transaction price is fixed, variable, or some combination of both. 1. Loyola Inc. sells $70,000 of inventory during the year to customers for $140,000. Loyola Inc. accepts returns up to 3 months after the date of purchase. Loyola estimates returns to be 6% of sales. a. Transaction price Answer b. Variable consideration Answer Fixed consideration Answer 2. Nakoma Corp. sells product offering a retroactive volume discount on certain cumulative sales volumes as follows: 0 to 500 units cost $10 each; 501 to 1,000 units cost $9 each; 1,001 units and beyond cost $8 each. For Nakoma’s largest customer, Nakoma estimates the likelihood of cumulative purchases for the year as follows: 15% for 400 units, 50% for 800 units, and 35% for 1,200 units. The revenue contract stipulates that the price per unit of product will be adjusted retroactively once…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Principles of Cost AccountingAccountingISBN:9781305087408Author:Edward J. Vanderbeck, Maria R. MitchellPublisher:Cengage Learning
Principles of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax College
Principles of Cost Accounting
Accounting
ISBN:9781305087408
Author:Edward J. Vanderbeck, Maria R. Mitchell
Publisher:Cengage Learning
Principles of Accounting Volume 2
Accounting
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax College
Incremental Analysis - Sell or Process Further; Author: Melissa Shirah;https://www.youtube.com/watch?v=7D6QnBt5KPk;License: Standard Youtube License