Cost of bricks removed from kilns... 15,100,000 $293,684.45 15,550,000 $299,684.00 8.565 13.099 18.683 450,000 5,999.55 19.4493 34,000.00 2.25 21.70096 16.25 31, 1920.... Cost of bricks sold 655,000 14,214.12 21.70096 14,500,000 $314,364.08 $9.068 is the burning cost per M, not including spoilage and work overhead. The rate including these items is: $19.4493 cost per M of burned bricks removed from kilns 8.565 cost per M of bricks set in kilns Excess deducted from rentals paid in advance.... Balance of rentals paid in advance. 2,300.00 $5,200.00 The depreciation reserve at November 1, 1919, was $25,000.00 Interest has been paid on the bonds for only nine months. If the bonds were outstanding the entire year, there is $2,250.00 accrued interest. However, the date of issue is unknown. (a) The X Y Z company, established for ten years, has a machinery and equipment account which has been increased from year to year as new equipment purchases have been made. It appears also that certain renewals and repairs have been charged to this account. Each year a credit has been made to the account for depreciation, offset by corresponding debit to profit and loss account, the ratio of depreciation being adequate. The company now disposes of a part of its plant at a price equal to what was paid for it seven years previously and credits the entire amount to machinery and equipment account. What adjustments, if any, are needed to correct the account? (b) The company also has several delivery trucks charged to truck account at cost, against which it has set up depreciation at end of each year by credit to a separate reserve for depreciation of trucks, debiting the amount to profit and loss account. A truck was purchased January 1, 1918, for $4,000.00. Depreciation has been provided at 20% per annum. December 31, 1919, it is wrecked by collision; $1,000.00 is obtained from the insurance company and $250,000 obtained from salvage. What entries are needed to adjust the ledger accounts? Answer to Question 2: On (a) Ordinary renewals and repairs should not have been charged to the asset account, and they should be taken out and charged to surplus, except those of the current year, which should be charged to profit and loss. As the asset account had been credited with depreciation, the balance of the account represented the carrying value of the machinery and equipment (plus renewals and repairs, which will be taken out). The account should have been credited with the carrying value of the portion of the plant sold. The entry for the sale should be reversed and an entry made crediting the asset account with cost less depreciation and crediting surplus with the depreciation written off, not because it was depreciation but because it is the difference between carrying value and selling price, and this difference is an extraneous profit. While we are adjusting the accounts it would be advisable to take the depreciation credits out of the asset account and set In a certain department of a large dry-goods house the purchases for a year were $30,000.00. They were in the first place marked up for "selling" purposes to $45,000.00. Later additional mark-ups amounting to $2,000.00 were made and mark-downs were also recorded aggregating $5,000.00. At the end of the fiscal period there were found to be on hand goods of the marked selling value of $10,000.00. State how you would arrive at their inventory value for the purpose of closing the books, and calculate the amount. Explain fully. Answer to Question 3: I should recommend taking a physical inventory for purposes of closing the books because the method of approximating cost from the figures given is based on averages and will not give accurate results unless the mark-ups and mark-downs applied proportionately to all goods purchased and sold. The approximate inventory could be computed as follows: |