24.Crested Butte Company is preparing its year-end 2007 financial statements. For each of the cases that follow, indicate the amount that should be reported as part of inventory cost at December 31, 2007.
Inventory TransactionAmount to be recorded
as inventory cost
a.On December 20, inventory costing $10,000 was purchased FOB destination. At December 31, 2007 these goods had not yet arrived.
______________
b.Freight costs of $600 cash were paid to a shipping company for transporting goods received on December 31, 2007, and which are unsold.
______________
c.On December 26, 2007, inventory costing $18,000 was purchased subject to a 3% discount if paid for within 10 days. CB has a policy of taking all such discounts but had not done so by year-end.
______________
d.On December 23, inventory costing $24,000 was purchased FOB shipping point. At December 31, 2007 these goods had not yet arrived.
______________
25.Palm-Joe Manufacturing had the following inventory-related transactions during August of 2007. For each event, show how it would be entered into the accounting system:
a. Raw materials costing $192,000 were acquired from a supplier on credit.
b. One-half of the materials purchased in part a. were entered into production.
c. Direct labor costs totaling $70,000 were incurred in production.
d. Overhead costs incurred for the period included supplies (16,000), depreciation of factory equipment (26,000), and indiect labor (10,000). As of the end of the month, the indirect labor costs had not been paid.
e. Goods having a total production cost of $200,000 were completed and moved from the factory to the warehouse for sale to customers.
f. One-half of the goods from part (e) were sold to customers for $170,000
ACCOUNT ASSETS = LIABILITIES + OWNERS’ EQUITY