The Devon Motor Company produces motorcycles. During April,the company purchased

Question

The Devon Motor Company produces motorcycles. During April,the company purchased 8,000 batteries at a cost of $10 per battery.Devon withdrew 7,600 batteries from the storeroom during the month.Of these, 100 were used to replace batteries in motorcycles beingused by the company's traveling sales staff. The remaining7,500 batteries withdrawn from the storeroom were placed inmotorcycles being produced by the company. Of the motorcycles inproduction during April, 90% were completed and transferred fromwork in process to finished goods. Of the motorcycles completedduring the month, 30% were unsold at April 30. (There were noinventories of any type on April 1). 1. Determine the cost of batteries that would appear in eachof the following accounts at April 30. a) raw materials b) work in process c) finished goods d) cost of goods sold e) selling expanse 2. Specify whether each of the above accounts would appear onthe balance sheet or on the income statement at April 30. The Devon Motor Company produces motorcycles. During April,the company purchased 8,000 batteries at a cost of $10 per battery.Devon withdrew 7,600 batteries from the storeroom during the month.Of these, 100 were used to replace batteries in motorcycles beingused by the company's traveling sales staff. The remaining7,500 batteries withdrawn from the storeroom were placed inmotorcycles being produced by the company. Of the motorcycles inproduction during April, 90% were completed and transferred fromwork in process to finished goods. Of the motorcycles completedduring the month, 30% were unsold at April 30. (There were noinventories of any type on April 1). 1. Determine the cost of batteries that would appear in eachof the following accounts at April 30. a) raw materials b) work in process c) finished goods d) cost of goods sold e) selling expanse 2. Specify whether each of the above accounts would appear onthe balance sheet or on the income statement at April 30.

Explanation / Answer

a) rawmaterials         400batteries @ $10 perbattery                     =       $4,000           b) work in process   7,500 batteries x $10 x10%                           =        $7,500 c) finished goods      7,500batteries x $10 x 90%  x30%             =      $20,250 d) cost of goods sold   7,500 batteries x $10 x90% x70%           =      $47,250 e) sellingexpense               100batteries @$10                           =         $1,000                                                                                                    --------------------               Total8,000 batteries purchased @ $10 perbattery                  $80,000                                                                                                    =========== 2. Specify whether each of the above accounts would appear onthe balance sheet or on the income statement at April 30. a) rawmaterials  stock                     $4,000   Balance Sheet           b) work inprocess                          $7,500    BalanceSheet   c) Finishedgoods stock                 $20,250   BalanceSheet d) cost of goodssold                    $47,250   IncomeStatement e) sellingexpense                            $1,000   IncomeStatement a) rawmaterials  stock                     $4,000   Balance Sheet           b) work inprocess                          $7,500    BalanceSheet   c) Finishedgoods stock                 $20,250   BalanceSheet d) cost of goodssold                    $47,250   IncomeStatement e) sellingexpense                            $1,000   IncomeStatement

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