Runcke Motor Company manufactures automobiles. During September 2011 the company
ID: 2376612 • Letter: R
Question
Runcke Motor Company manufactures automobiles. During September 2011 the company purchased 5,000 head lamps at a cost of $9 per lamp. Runcke withdrew 4,650 lamps from the warehouse during the month. Fifty of these lamps were used to replace the head lamps in autos used by traveling sales staff. The remaining 4,600 lamps were put in autos manufactured during the month.
Of the autos put into production during September 2011, 90% were completed and transferred to the company%u2019s storage lot. Of the cars completed during the month, 75% were sold by September 30.
Determine the amount of cost to appear in various accounts, and indicate in which financial statements these accounts would appear.
Instructions
Runcke Motor Company manufactures automobiles. During September 2011 the company purchased 5,000 head lamps at a cost of $9 per lamp. Runcke withdrew 4,650 lamps from the warehouse during the month. Fifty of these lamps were used to replace the head lamps in autos used by traveling sales staff. The remaining 4,600 lamps were put in autos manufactured during the month. Of the autos put into production during September 2011, 90% were completed and transferred to the company%u2019s storage lot. Of the cars completed during the month, 75% were sold by September 30. Determine the amount of cost to appear in various accounts, and indicate in which financial statements these accounts would appear. 1.Determine the cost of head lamps that would appear in each of the following accounts at September 30, 2011: Raw Materials, Work in Process, Finished Goods, Cost of Goods Sold, and Selling Expenses. Write a short memo to the chief accountant, indicating whether and where each of the accounts in (a) would appear on the income statement or on the balance sheet at September 30, 2011.Explanation / Answer
E1-17 Runcke Motor Company manufactures automobiles. During September 2011 the company purchased 5,000 head lamps at a cost of $9 per lamp. Runcke withdrew 4,650 lamps from the warehouse during the month. Fifty of these lamps were used to replace the head lamps in autos used by traveling sales staff. The remaining 4,600 lamps were put in autos manufactured during the month.
Of the autos put into production during September 2011, 90% were completed and transferred to the company%u2019s storage lot. Of the cars completed during the month, 75% were sold by September 30.
Instructions
(a) Determine the cost of head lamps that would appear in each of the following accounts at September 30, 2011: Raw Materials, Work in Process, Finished Goods, Cost of Goods Sold, and Selling Expenses.
Head Lamps Purchased 5,000
Head Lamps removed from Inventory 4,650
Head Lamps remaining in inventory 350
Cost for each head lamp $ 9.00
Cost in Raw Materials $3,150.00
Lamps used in production 4,600
Autos completed and xferred to finished goods (90%) 4,140
Autos still in WIP on Sept 30 460
Cost for each head lamp $ 9.00
Cost of WIP $ 4,140.00
Autos Completed & Xferred to finished goods 4,140
Autos Sold in the month (75%) 3,105
Autos still in finished goods 1,035
Cost per lamp head $ 9.00
Cost in finished goods on Sept 30 $ 9,315
Autos sold during month 3,105
Cost of each lamp $ 9.00
COGS for month $ 27945.00
Head lamps for traveling staff 50
Cost for each lamp $ 9.00
Selling Expense $ 450.00
(b) Write a short memo to the chief accountant, indicating whether and where each of the accounts in (a) would appear on the income statement or on the balance sheet at September 30, 2011
To: Chief Accountant
From: Todd Schweikert
Subject: Inventory Accounts
The inventory accounts we have for the month will appear in the following financial statement:
%uF0D8 Raw Material Inventory: Balance Sheet
%uF0D8 Work In Process (WIP) Inventory: Balance Sheet
%uF0D8 Finished Goods Inventory: Balance Sheet
%uF0D8 Cost of Goods Sold (COGS): Income Statement
%uF0D8 Selling Expense: Income Statement
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