Date of publication: 2017-07-09 06:32
If an inventory account is used for scrap, an additional entry is required in both of the previous illustrations. An estimate of the disposal value of the scrap is charged to the Scrap inventory account. The credits are made to the same accounts as above, depending on whether the scrap is common to all jobs or caused by specific job specifications. When the scrap is sold, the entry includes a debit to cash and a credit to the Scrap inventory account.
Inventory records can be maintained on a perpetual or a periodic basis. Conceptually, the perpetual inventory method provides a company with the capability of maintaining continuous records of the quantities of inventory and the costs flowing through the inventory accounts. The periodic method, on the other hand, requires counting the quantity of inventory before inventory records can be updated. In the past, manufacturers tended to keep perpetual inventories, while retailers used the periodic method. However, today a variety of modern point of sale devices and dedicated microcomputer software are readily available to provide any company with perpetual inventory capability.
One of the grand success stories of science is the unification of the physical universe. It turns out that all natural objects, events, and processes are connected to each other in such a way that only a relatively few concepts are needed to make sense of them.
Now that you have a grasp of the concepts and algorithm for developing full absorption costing statements, consider the following example. The Hollow Company is a small manufacturer of leather products. The financial results needed to produce an income statement for January appear in Exhibit 7-9.
An important point to be made along the way is that one cannot determine how the solar system is put together just by looking at it. Diagrams show what the system would look like if people could see it from far away, a feat that cannot be accomplished. Telescopes and other instruments do provide information, but a model is really needed to make sense out of the information. (The realization that people are not able to see, from the outside, how the solar system is constructed will help students understand the basis for the Copernican Revolution when the topic arises later.)
The text of each learning goal is followed by its code, consisting of the chapter, section, grade range, and the number of the goal. Lowercase letters at the end of the code indicate which part of the 6998 version it comes from (., 8775 a 8776 indicates the first sentence in the 6998 version, 8775 b 8776 indicates the second sentence, and so on). A single asterisk at the end of the code means that the learning goal has been edited from the original, whereas two asterisks mean that the idea is a new learning goal.
Entry 8. The credits in entry 8 include accounts such as accumulated depreciation, accounts payable, prepaid insurance, pension cost, and several others. Remember that all factory costs, other than direct material and direct labor, are charged to factory overhead.
The concepts acquired in the earlier grades should now be extended to nuclear realms and living organisms. Revisiting energy concepts in new contexts provides opportunities to improve student understanding of the basic concepts and to see just how powerful they are.
Water offers another important set of experiences for students at this level. Students can conduct investigations that go beyond the observations made in the earlier grades to learn the connection between liquid and solid forms, but recognizing that water can also be a gas, while much more difficult, is still probably accessible. Perhaps the main thrust there is to try to figure out where water in an open container goes. This is neither self-evident nor easy to detect. But the water cycle is of such profound importance to life on earth that students should certainly have experiences that will in time contribute to their understanding of evaporation, condensation, and the conservation of matter.
Entries 9 and 5. The factory payroll account is used as a clearing account in the approach illustrated in Exhibit 9-8. All factory labor costs are charged to this account (entry 9) until the necessary information is available to distribute the payroll. The wages and salaries payable account represents the liability for net pay, ., gross pay less withholding. The amounts withheld for federal income taxes (FIT), federal insurance contributions act tax (FICA), and other deductions are credited to the appropriate liability accounts. Entry 9 reflects the fact that the employer acts as a collection agent for the federal and state governments. Entry 5 records the payment to factory employees. Note that the amount is equal to the net pay and the credit is to cash.