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    IA Activity 6 Ass

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    WeStan Legends
    The document contains journal entries recording the acquisition of machinery through purchases and exchanges. It also includes problems calculating costs of finished goods and buildings by allocating overhead and direct labor costs. Multiple choice questions assess understanding of property, plant, and equipment accounting concepts.

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    IA Activity 6 Ass

    Uploaded by

    WeStan Legends
    287 views6 pages
    The document contains journal entries recording the acquisition of machinery through purchases and exchanges. It also includes problems calculating costs of finished goods and buildings by allocating overhead and direct labor costs. Multiple choice questions assess understanding of property, plant, and equipment accounting concepts.

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    IA Activity 6 Ass

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    The document contains journal entries recording the acquisition of machinery through purchases and exchanges. It also includes problems calculating costs of finished goods and buildings by allocating overhead and direct labor costs. Multiple choice questions assess understanding of property, plant, and equipment accounting concepts.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    287 views6 pages

    IA Activity 6 Ass

    Uploaded by

    WeStan Legends
    The document contains journal entries recording the acquisition of machinery through purchases and exchanges. It also includes problems calculating costs of finished goods and buildings by allocating overhead and direct labor costs. Multiple choice questions assess understanding of property, plant, and equipment accounting concepts.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    You are on page 1of 6

    Activity 6 – Chapter 23 Property, Plant and Equipment

    Problem 23-4 (IAA)

    Prepare journal entries to record the machinery acquisitions and related interest.

    Anson Company
    Journal Entries

    1. Acquisition:

    Machinery P3,000,000
    Accounts payable P3,000,000

    Payment:

    Accounts payable 3,000,000


    Purchase discount loss (3,000,000 x 0.10) 300,000
    Cash 3,000,000
    Machinery 300,000

    Loss on retirement of old Machine 50,000


    Spare parts inventory 150,000
    Cash 200,000

    2. Acquisition:

    Machinery P4,700,000
    Interest Expense 800,000
    Cash 500,000
    Notes payable 5,000,000

    Payment:

    Notes Payable 5,000,000


    Cash 5,000,000

    3. Acquisition:

    Machinery (500,000 x 3.17) 1,585,000


    Discount on note payable 415,000
    Note payable 2,000,000

    Payment at the end of the year:

    Note Payable 500,000


    Cash 500,000

    Interest Expense (1,585,000 x 10%) 158,500


    Discount on note payable 158,500

    4. Acquisition:

    Machinery (2,000,000 x 0.68) 1,360,000


    Discount on note payable 640,000
    Note payable 2,000,000

    Interest:

    Interest Expense (10% x 1,360,000) 136,000


    Discount on note Payable 136,000

    Problem 23-8 (AICPA Adapted)

    Prepare journal entries to record the exchange transaction.

    Mellow Company
    Journal Entries

    Equipment – new 1,400,000


    Accumulated Depreciation 600,000
    Equipment – old 1,000,000
    Cash 980,000
    Gain in exchange 20,000

    Problem 23-10 (IAA)

    Compute the cost of finished goods and building.


    1. Total Finished goods Building

    Direct labor 6,000,000 4,200,000 1,800,000

    Materials 7,000,000 3,000,000 4,000,000

    Overhead 2,000,000 2,000,000 -

    15,000,000 9,200,000 5,800,000

    2. Total Finished goods Building

    Direct labor 6,000,000 4,200,000 1,800,000

    Materials 7,000,000 3,000,000 4,000,000

    Overhead 2,000,000 - -

    135/180 x 2,000,000 1,500,000


    45/180 x 2,000,000 500,000
    15,000,000 8,700,000 6,300,000

    3. Total Finished goods Building

    Direct labor 6,000,000 4,200,000 1,800,000

    Materials 7,000,000 3,000,000 4,000,000

    Overhead 2,000,000 - -

    42/60 x 2,000,000 1,400,000


    18/60 x 2,000,000 600,000
    15,000,000 8,600,000 6,400,000

    Problem 23-11 (IAA)

    a. Calculate the cost of the machinery, assuming that manufacturing activities are to be
    charged with overhead at the rate experienced in the prior year.

    Materials P500,000
    Direct Labor 1,000,000
    *Overhead 600,000
    Cost of Machinery P2,100,000

    Overhead P3,600,000
    Charged to finished goods (75% x 4,000,000) (3,000,000)
    *Charged to machinery P600,000

    b. Calculate the cost of the machinery if manufacturing and construction activities are to
    be charged with overhead at the same rate.

    Materials P500,000
    *Direct Labor 1,000,000
    Overhead (1/5 x 3,600,000) 720,000
    Cost of Machinery P2,200,000

    Finished Goods P4,000,000 (4/5)


    *Machinery 1,000,000 (1/5)
    Direct Labor P5,000,000

    Problem 23-15 (AICPA Adapted)

    1. What amount should be recorded as initial cost of the machine?

    P200,000 x 5.712 = d. P1,142,400

    2. What amount should be recorded as discount on note payable on December 31,


    2021?
    P200,000 x 8 payments P1,600,000
    Less: Initial cost (1,142,400)
    Discount on note payable - December 31, 2021 b. P457,600

    3. What amount should be recorded as interest expense for 2022?

    Initial cost P1,142,400


    Noninterest bearing note P200,000
    Carrying value of the notes – Dec. 31, 2021 P942,400
    Multiply by 0.11
    Interest expense – 2022 b. P103,664

    4. What is the carrying amount of note payable on December 31, 2022?

    Noninterest bearing note P200,000


    Less: Interest expense (P103,664)
    Amount applied to principal P96,336

    Carrying value of the notes – Dec. 31, 2021 P942,400


    Less: Amount applied to principal (P96,336)
    Carrying value of the notes – Dec. 31, 2022 b. P846,064

    Problem 23-28 Multiple choice (PAS 16)

    1. d
    2. b
    3. d
    4. a
    5. d

    Problem 23-29 Multiple choice (IAA)

    1. b
    2. a
    3. a
    4. c
    5. b

    Problem 23-30 Multiple choice (AICPA Adapted)


    1. d
    2. a
    3. b
    4. a
    5. c

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