Cordell Inc. experienced the following events in Year 1, its first year of operation:Received $55,000 cash from the issue of com
mon stock. Performed services on account for $77,000. Paid a $5,500 cash dividend to the stockholders. Collected $61,000 of the accounts receivable.Paid $55,000 cash for other operating expenses.Performed services for $16,500 cash. Recognized $2,500 of accrued utilities expense at the end of the year.
Identify the events that result in revenue or expense recognition and those which affect the statement of cash flows. In the Statement of Cash Flows column, use OA to designate operating activity, FA for financing activity, IA for investing activity and NA to indicate the element is not affected by the event.
Identify the events that result in revenue or expense recognition and those which affect the statement of cash flows. In the Statement of Cash Flows column, use OA to designate operating activity, FA for financing activity, IA for investing activity and NA to indicate the element is not affected by the event.
1 answer:
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Answer:
(E) 225,000; 195,000
Explanation:
Provided information,
Method used = FIFO
Provided units in opening as well as closing are 100% complete with respect to materials.
Opening = 50,000 units for $70,500 which were 100% complete with respect to material
During the month = 225,000 units for $342,000
Since both are 100 % complete for materials
Equivalent units for materials for the month = 225,000 = 225,000 units
Provided for conversion cost
Opening = 50,000 which is 40% complete, that means 60% was not complete which is completed during the month
= 50,000 60 % = 30,000 units during the month
225,000 units newly added this month out of which 150,000 units are completed
Remaining 75,000 units are 20% complete for conversion cost = 75,000 20% = 15,000 units completed.
Equivalent units completed during the month = 30,000 from opening + 150,000 + 15,000 = 195,000 units
Therefore correct option is
(E) 225,000; 195,000