Direct Labor
Beginning Factory Overhead:
Inventory - Depreciation 5. Lease 2nd,3rd,4thpayment date
Purchases - Heat and Light (utilities)
Purchase - Power Machinery (if payment is halfway through fiscal year then DR int exp)
Discount - Supervision Lease interest payable 500
- Production manager Lease obligation(annual obligation payments – int. expense – step500 )
Duty - Misc. (i.e. Insurance)
Freight-In CORMU Cash 1000
Purchase COWIP 6. Lease End
Return and Depreciation expense 5000
Allowances COFGM Leased asset 5000
Ending Inventory = pRM
CORMA + pDL + pFOH Operating Lease Example:
CORMU Lease Expense 10
(PLUG) pRM = Raw materials (given) Cash/AP/Prepaid Lease 10
Ending pDL = Direct Labor (given)
Raw pFOH = Partial proxy/ total proxy * total ii) If prepaid semi-annually then:
Materials a) Prepaid lease expense 100
FOH Cash 100
Beginning Inventory - Look for term (spread evenly = proxy)
COFGM Salaries and Wages b) Lease Expense (for remaining months = 4 100* 4/12) 33
(find how many 1. Clear wages payable Prepaid lease expense (asset) 33
items were made Shares
during fiscal period Wages payable 100
Salaries exp. 100 $5.50 Cumulative, convertible, non-callable, no par value, preferred shares
then divide COGAFS WIP (if previous cash disbursement) 100 $5.50 = dividend rate
by this) 2. Allocate new wages payable to WIP Cumulative = dividends are owed each year, even if they are not paid
COGAFS WIP 150 Convertible = shares can be converted into common stock at shareholders option
Wages Payable 150
COGS 3. For DL take disbursement and subtract Non-Callable = cannot be redeemed by company
ENDING FINISHED (Calculated No par value = price/share is determined by the market
GOODS INVENTORY using everything that is not DL (including FOH for
(COGAFS/UAFS * E/B weighted salaries and first wages payable)
IN UNITS) average) WIP (DL) 200 1. Issue of stock (record at price of asset or cash gained)
WIP (FOH) 100 Cash/asset 100
# UNITS LEFT + UNITS SOLD (sales) Salaries exp. 300 Common/Preferred stock 100
+ (ANY STOLEN UNITS) = UAFS **When doing inventory, if it 2. Preferred share conversion to common shares (use book value of preferred * %
being distributed) if % is not given take # of shares converted/ total to get %)
says “Physical inventory count” Preferred stock 100
then add things in transit** Common Stock 100
Merchandise Inventory
- Specific Identification: value everything at their unique market value price 3. Cash dividends
- FIFO: Oldest inventory is sold first and E/B is valued at most recent price (if youa) Record date: (if dividends in arrears then account for the # of arrears)
Retained Earnings 50
have a whole order, then you take the full amount owing and half orders you treat
like weighted averages) Preferred/Common Dividends Payable 50
- Average Cost: (COGAFS/UAFS [total units available for sale]) x E/B in Units b) Date of Payment:
Preferred/Common Dividends payable 50
-LCNRV Rule: record inventory at lower of cost vs. net realizable value
Straight Line Depreciation Patent amortization = WIP Cash 50
- (HC-RV) / UL * n/12 (take BV /[total length of patent. Stock Dividends (# of common shares outstanding * % being distributed * Market
– years passed]) price of stock at time of dividend declaration)
Units of Production Method
- (HC-RV) / Total Units * Units Used - Copyrights and trademarks are Ex: 100,000 shares * 10% = 10,000 * $10/share = 100,000
(Double) Diminishing/Declining Balance allocated to amortization exp a) Declaration date:
Retained earnings 100,000
(For last year of assets life: Depreciation = (HC-AD) – RV) Stock dividends distributable 100,000
- (HC-AD) / UL *n/12
Or b) Distribution date
- (HC-AD) / UL *2 *n/12 Stock dividend distributable 100,000
Common stock 100,000
Leases
Terms for finance lease: 5. Stock Repurchase (purchasing back and retiring your shares) – Common Shares #
1. It is reasonably certain the asset will be purchased by the lessee at substantially take T/B of common shares and multiply by the % you are repurchasing
If purchase price is < BV:
below fair market value or transferred to the lessee at the end of the lease
(bargaining renewal options count) Common shares 100
2. The lease is long enough that the lessee will receive most of the economic benefit Contributed capital 20
Cash 80
3. The lease allows the lessor to recover substantially all of the investment.
4. The leased asset is so specialized without modification that it is of value only tof purchase price is >BV:
the lessee. Common shares 100
Contrib. Capital (if it already has a CR balance) 20
1. Time of Purchase (Equal to fair value or present value – use table) R/E (if no cont. Capital or in excess of cont. Capital)(20)
a) i = given, n -1 = # of dates
b) Use table 2 – the annuities table Cash 120
c) Book Value = Multiply PV factor by value of one payment and add the value of ***** FOR ANY TYPE OF DIVIDEND REMEMBER PREFERRED SHARES FIRST ******
one payment
Asset under lease 5000 Bonds
Lease Obligation 5000 1. i) Recording Bond: either given as % (ex. trading at 102) or use tables (n*2 = # of
payments, i/2 = market interest rate)
2. First Payment (Can be same day you signed lease) – Annual payment amount
(If not first payment then replace this step with step #5) Steps: 1) PV (principle) = (Face Value * PV factor from table 1)
Lease obligation 1000 2) PV (Coupon) = (FV * Coupon rate * 6/12) * PV factor from table 2
3) Add 1 and 2 together to get bond price
Cash 1000
3. Accrue interest (Calculate at Fiscal Year End) Cash 1000
Interest expense 500 Bond Payable 1000
ii) IF IT SAYS REMIT PROCEEDS FOR A CERTAIN DATE THEN YOU MUST:
Interest payable 500 Proceeds Receivable 1000
Interest = net lease obligation (T/B of lease obligation - including cash
disbursement) * i * n/12 – (# months used during fiscal year) Bond payable 1000
4. Depreciate Asset (Book value/n or lease length = depreciation) (Calculate at Fiscal. Bond Interest Expense
Carrying va
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