Author Question: Able Baker Company incurred the following expenditures for the purchase and use of a machine for the ... (Read 793 times)

corkyiscool3328 · **on:** Jul 5, 2018

Able Baker Company incurred the following expenditures for the purchase and use of a machine for the company's factory in Puerto Rico.

Required: Put an X in the appropriate box to indicate which expenditures should be capitalized and which should be expensed:

Expenditure Capitalize Expense
60,000 invoice price of the machine
3,000 transportation costs for the machine
1,400 for inspection of the machine
1,000 for moving and handling the machine
3,500 for installation of the machine
2,200 for testing the machine
12,000 in power costs for the year to operate the machine
2,000 for ordinary repairs and maintenance on the
machine for the year
4,000 for an overhaul to make the machine run more
efficiently

Question 2

When using the percent of sales method of estimating uncollectibles the entry to record bad debt expense includes acredit to Accounts Receivable.
a. True
b. False

Indicate whether the statement is true or false

tsternbergh47 · **Reply #1 on:** Jul 5, 2018

Answer to Question 1

Expenditure Capitalize Expense
60,000 invoice price of the machine X
3,000 transportation costs for the machine X
1,400 for inspection of the machine X
1,000 for moving and handling the machine X
3,500 for installation of the machine X
2,200 for testing the machine X
12,000 in power costs for the year to operate the machine X
2,000 for ordinary repairs and maintenance on the
machine for the year X
4,000 for an overhaul to make the machine run more
efficiently X

Answer to Question 2

False