Accounting 2 Tips


Cost of Production Report

posted Mar 29, 2011, 12:42 PM by Prof Kiernan   [ updated Mar 30, 2011, 4:32 PM ]

There are a few parts to this report.

First there's the units charged to production:
Inventory in process at the beginning of the period
+________Received from materials_____________
Total units accounted for by the department

Keep in mind this is a mathematical check, the total accounted for should match the total units to be assigned cost in the last part of the problem.

the SECOND part is the units to be assigned cost:
                        

  whole units direct materials conversion
BEGINNING inventory (% completed) inventory at
beginning of
period
GIVEN
in the problem
whole units
times
(100%-% completed)
Started and COMPLETED during the month  TRANSFERRED
- BEGINNING
 <--same #
<-- same #
TRANSFERRED to another department amount
transferred
to another
department
 subtotal subtotal
ENDING inventory in process (% completed)  value in
TRANSFERRED
times
% completed
value in
TRANSFERRED
times
% completed
value in
TRANSFERRED
times
% completed
TOTAL units to be assigned cost  total
total
total

Last is the Unit costs:

Total costs for month


  Direct materials Conversion Total
Total costs for month given in problem given in problem  
total equivalent units total units to be assigned costs in the direct materials column from step 2 total units to be assigned costs in the conversion column from step 2  
Cost per equivalent unit divide cost for month by equivalent units divide cost for month by equivalent units  
costs charged to production:      
inventory in process BEGINNING     GIVEN
COSTS for month     TOTAL COSTS direct materials + total costs conversion
total costs accounted for by department     TOTAL
to complete inventory in process for month given in problem value from step 2 BEGINNING inventory under conversion Direct material + conversion
started and completed during the month WHOLE UNITS from Started and COMPLETED in step 2 TIMES the value in cost per equivalent unit under direct materials WHOLE UNITS from Started and COMPLETED in step 2 TIMES the value in cost per equivalent unit under Conversion Direct material + conversion
transferred to finished goods     total
inventory in porcess at the END of the month value from ENDING inventory in step 2 under direct materials times value in cost per equivalent unit under direct materials value from ENDING inventory in step 2 under conversion times value in cost per equivalent unit under Conversion Direct material + conversion
total costs assigned by department     Total this # should match the value in COSTS for month above








OMG its a BOND!

posted Feb 11, 2010, 2:43 PM by Prof Kiernan

So most people have difficulties with this section of the book. It really isn't too bad as long as you follow these 5 simple steps:

Step 1: Find how many periods(payments) you have: # of years times # of periods per year
Find the effective market rate to be used on the table: effective market % divided by the # of periods per year

Step 2: Get table values from tables in appendix A:
Present Value of $1 for # of periods at #%
Present Value of annuity of $1 for
for # of periods at #%

Step 3: Get amount of interest payment:
Face value of bond times purchase rate (% bond) times # of months divided by 12 months per year

Step 4: Fill out the table below:
 Present Value of $1 for # periods at #%              # 
 times Face value
 x         #
 
 Present value of face amount due in 5 years
        $ #          $ #
 Present Value of annuity of $1 for # periods at #%              #  
 times interest payment
 x       $  #
 
 Present value of 10 interest payments
           $ # +    $ #
Total Value of Bonds (Cash value)
        $ #


Step 5:
plug into entry

Cash (or what you're getting)
Discount on bonds Payable(Note if a credit the account name is "Premium on Bonds Payable")
            Bonds payable

Cash (or what you're getting)         $ #
Discount on bonds Payable              #
            Bonds payable                                #

Note: discount on bonds payable is the difference between Bonds payable and cash (or what you are getting)


Here's an example:
You get tired of shoveling snow after this last blizzard and decide to buy the biggest snow blower you can find in exchange for a 5 year $10,000 12% bond payable every 6 months (payments are semiannual) at an effective interest rate of 13%. a) Journalize the entry to record the purchase of the snow blower. b) Journalize the first month's interest payment.

a) Journalize the entry to record the purchase of the snow blower
First:
Find how many periods(payments) you have: # of years times # of periods per year = 5 years times 2 periods per year = 10 periods total
Find the effective market rate to be used on the table: effective market % divided by the # of periods per year = effective market 13% divided by 2 periods per year=6.5%

Second:
Get table values from tables in appendix A:
Present Value of $1 for 10 periods at 6.5%  = 0.53273
Present Value of annuity of $1 for 10 periods at 6.5% = 7.18883


Third Get amount of interest payment:
Face value of bond times purchase rate (% bond) times # of months divided by 12 months per year = Face value of bond $10,000 times  contract rate 12% bond times 6 months (semiannual) divided by 12 months per year = $600

Fourth fill out the table below:
 Present Value of $1 for 10 periods at 6.5%              0.53273 
 times Face value
 x       $ 10,000
 
 Present value of face amount due in 5 years
          $ 5327.3          $ 5327.3
 Present Value of annuity of $1 for 10 periods at 6.5%           7.18883  
 times interest payment
 x           $  600
 
 Present value of 10 interest payments
        $ 4313.298 +    $ 4313.298
Total Value of Bonds (Cash value)
        $ 9640.598


Fifth plug into entry

Cash (or what you're getting)
Discount on bonds Payable(Note if a credit the account name is "Premium on Bonds Payable")
            Bonds payable


Snow Blower                                $ 9640.598
Discount on bonds Payable              359.402
            Bonds payable                                        10,000

Note: discount on bonds payable is the difference between Bonds payable and What you are getting (snow blower)

Paid in Capital - in excess of par

posted Feb 4, 2010, 5:47 AM by Prof Kiernan

Paid In Capital (PIC) is the amount that is overpaid (or underpaid) for an item purchased using stock.

Example 1:
If you purchase a $190 iPod touch by exchanging 10 shares of capital stock with a par value of $14
the paid in capital would be a credit of $50 ($14 per share *10 shares = $140)

iPod touch            $190
    Paid in Capital               50
   
Capital stock                140

Example 2:
If you purchase a $290 iPod touch by exchanging 10 shares of capital stock with a par value of $32
the paid in capital would be a debit of $30 ($32 per share *10 shares = $320)

iPod touch            $290
Paid in Capital          30
   
Capital stock                320

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