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Problem 11-8 Whispering Sporting Goods Inc. has been experiencing growth in the demand for its products over the last several years. The last two Olympic
Problem 11-8 Whispering Sporting Goods Inc. has been experiencing growth in the demand for its products over the last several years. The last two Olympic Games greatly increased the popularity of basketball around the world. As a result, a European sports retailing consortium entered into an agreement with Whispering's Roundball Division to purchase basketballs and other accessories on an increasing basis over the next 5 years. To be able to meet the quantity commitments of this agreement, Whispering had to obtain additional manufacturing capacity. A real estate firm located an available factory in close proximity to Whispering's Roundball manufacturing facility, and Whispering agreed to purchase the factory and used machinery from Encino Athletic Equipment Company on October 1, 2016. Renovations were necessary to convert the factory for Whispering's manufacturing use. The terms of the agreement required Whispering to pay Encino $69,000 when renovations started on January 1, 2017, with the balance to be paid as renovations were completed. The overall purchase price for the factory and machinery was $552,000. The building renovations were contracted to Malone Construction at $138,000. The payments made, as renovations progressed during 2017, are shown below. The factory was placed in service on January 1,2018
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