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Exercise 10-04 Bonita Co. both purchases and constructs various equipment it uses in its operations. The following items for two different types of equipment were

Exercise 10-04

Bonita Co. both purchases and constructs various equipment it uses in its operations. The following items for two different types of equipment were recorded in random order during the calendar year 2020.

Purchase

Cash paid for equipment, including sales tax of $5,100

$107,100

Freight and insurance cost while in transit

2,040

Cost of moving equipment into place at factory

3,162

Wage cost for technicians to test equipment

4,080

Insurance premium paid during first year of operation on this equipment

1,530

Special plumbing fixtures required for new equipment

8,160

Repair cost incurred in first year of operations related to this equipment

1,326
Construction

Material and purchased parts (gross cost $204,000; failed to take 2% cash discount)

$204,000

Imputed interest on funds used during construction (stock financing)

14,280

Labor costs

193,800

Allocated overhead costs (fixed-$20,400; variable-$30,600)

51,000

Profit on self-construction

30,600

Cost of installing equipment

4,488

Compute the total cost to be capitalized for each of these two pieces of equipment.

Purchase equipment

(ENTER AMOUNT)

Construction equipment

(ENTER AMOUNT)

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