Exercises and Problems Week 2
Exercises and Problems –W2
E9-1
The following expenditures relating to plant assets were made by Spaulding Company during the first 2 months of 2011.
1. Paid $5,000 of accrued taxes at time plant site was acquired.
2. Paid $200 insurance to cover possible accident loss on new factory machinery while the machinery was in transit.
3. Paid $850 sales taxes on new delivery truck.
4. Paid $17,500 for parking lots and driveways on new plant site.
5. Paid $250 to have company name and advertising slogan painted on new delivery truck.
6. Paid $8,000 for installation of new factory machinery.
7. Paid $900 for one-year accident insurance policy on new delivery truck.
8. Paid $75 motor vehicle license fee on the new truck.
Instructions
(a) Explain the application of the cost principle in determining the acquisition cost of plant assets.
I need to add up the total cost that it takes to make the business operational to include taxes, insurance, and other fees that may apply in order to run. Of the list above, all are necessary to add together to find the acquisition costs of the plant assets which is $32,775.
(b) List the numbers of the foregoing transactions, and opposite each indicate the account title to which each expenditure that should be debited.
1. Paid $5,000 of accrued taxes at time plant site was acquired.
Land
2. Paid $200 insurance to cover possible accident loss on new factory machinery while the machinery was in transit.
Equipment
3. Paid $850 sales taxes on new delivery truck.
Equipment (added to the total cost of the delivery truck)
4. Paid $17,500 for parking lots and driveways on new plant site.
Land improvements
5. Paid $250 to have company name and advertising slogan painted on new delivery truck.
Equipment (added to the total cost of the delivery truck)
6. Paid $8,000 for installation of new factory machinery.
Equipment
7. Paid $900 for one-year accident insurance policy on new delivery truck.
Prepaid Asset
8. Paid $75 motor vehicle license
E9-1
The following expenditures relating to plant assets were made by Spaulding Company during the first 2 months of 2011.
1. Paid $5,000 of accrued taxes at time plant site was acquired.
2. Paid $200 insurance to cover possible accident loss on new factory machinery while the machinery was in transit.
3. Paid $850 sales taxes on new delivery truck.
4. Paid $17,500 for parking lots and driveways on new plant site.
5. Paid $250 to have company name and advertising slogan painted on new delivery truck.
6. Paid $8,000 for installation of new factory machinery.
7. Paid $900 for one-year accident insurance policy on new delivery truck.
8. Paid $75 motor vehicle license fee on the new truck.
Instructions
(a) Explain the application of the cost principle in determining the acquisition cost of plant assets.
I need to add up the total cost that it takes to make the business operational to include taxes, insurance, and other fees that may apply in order to run. Of the list above, all are necessary to add together to find the acquisition costs of the plant assets which is $32,775.
(b) List the numbers of the foregoing transactions, and opposite each indicate the account title to which each expenditure that should be debited.
1. Paid $5,000 of accrued taxes at time plant site was acquired.
Land
2. Paid $200 insurance to cover possible accident loss on new factory machinery while the machinery was in transit.
Equipment
3. Paid $850 sales taxes on new delivery truck.
Equipment (added to the total cost of the delivery truck)
4. Paid $17,500 for parking lots and driveways on new plant site.
Land improvements
5. Paid $250 to have company name and advertising slogan painted on new delivery truck.
Equipment (added to the total cost of the delivery truck)
6. Paid $8,000 for installation of new factory machinery.
Equipment
7. Paid $900 for one-year accident insurance policy on new delivery truck.
Prepaid Asset
8. Paid $75 motor vehicle license