Slide 9-6 Determining Cost Example On May 4, Heat Co., an Ohio maker of stoves, buys a new machine from a Texas company The new machine has a price of $52, 000 Sales tax was computed at 8 Heat Co pays $500 shipping cost to get the machine to ohio, After the machine arrives set-up costs of $1, 300 are incurred, along with $4, 000 in testing costs Compute the cost of Heat Co's new machine Irwin/McGraw-Hill ?The McGraw-Hill Companies, Inc., 1999
?The McGraw-Hill Companies, Inc., 1999 Slide 9-6 Irwin/McGraw-Hill Determining Cost Example On May 4, Heat Co., an Ohio maker of stoves, buys a new machine from a Texas company. The new machine has a price of $52,000. Sales tax was computed at 8%. Heat Co. pays $500 shipping cost to get the machine to Ohio. After the machine arrives, set-up costs of $1,300 are incurred, along with $4,000 in testing costs. Compute the cost of Heat Co.’s new machine
Slide 9-7 Determining Cost Example List price $52,000 Sales tax 8% 4,160 Transportation cost 500 Set-up 1.300 Testing 4,000 Total cost to Heat co $61,960 Date Description De bit Credit Prepare the journal entry Irwin/McGraw-Hill ?The McGraw-Hill Companies, Inc., 1999
?The McGraw-Hill Companies, Inc., 1999 Slide 9-7 Irwin/McGraw-Hill Determining Cost Example List price $ 52,000 Sales tax @ 8% 4,160 Transportation cost 500 Set-up 1,300 Testing 4,000 Total cost to Heat Co. $ 61,960 Date Description Debit Credit Prepare the journal entry
Slide 9-8 Determining Cost Example List price $52,000 Sales tax 8% 4,160 Transportation cost 500 Set-up 1.300 Testing 4,000 Total cost to Heat co $61,960 Date Description De bit Credit 4-May New Machine 61960 Cash 61960 Irwin/McGraw-Hill ?The McGraw-Hill Companies, Inc., 1999
?The McGraw-Hill Companies, Inc., 1999 Slide 9-8 Irwin/McGraw-Hill Determining Cost Example List price $ 52,000 Sales tax @ 8% 4,160 Transportation cost 500 Set-up 1,300 Testing 4,000 Total cost to Heat Co. $ 61,960 Date Description Debit Credit 4-May New Machine 61,960 Cash 61,960
Slide 9-9 Special Considerations Cost includes real estate Land commissions. escrow fees, legal fees, clearing and grading the property Improvements to land Land such as driveways, Improvements fences, and landscaping are recorded separately Irwin/McGraw-Hill ?The McGraw-Hill Companies, Inc, 1999
?The McGraw-Hill Companies, Inc., 1999 Slide 9-9 Irwin/McGraw-Hill Special Considerations Improvements to land such as driveways, fences, and landscaping are recorded separately. Land Improvements Cost includes real estate commissions, escrow fees, legal fees, clearing and grading the property. Land
Slide 9-10 Special Considerations Repairs made prior to the Buildings building being put in use are considered part of the building担cost Irwin/McGraw-Hill ?The McGraw-Hill Companies, Inc., 1999
?The McGraw-Hill Companies, Inc., 1999 Slide 9-10 Irwin/McGraw-Hill Special Considerations Repairs made prior to the building being put in use are considered part of the building抯 cost. Buildings