On 1 July,2003 Bryson Ltd Sells a Machine to Adams

question 15

Multiple Choice

On 1 July,2003 Bryson Ltd sells a machine to Adams Ltd in exchange for a promissory note which requires Adams Ltd to make five payments of $8,000,the first to be made on 30 June,2004.The machine cost Bryson Ltd $20,000 to manufacture.Bryson Ltd would normally sell this type of machine for $30,326 for cash or short-term credit.The implicit interest rate in the agreement is 10 per cent.What are the appropriate journal entries to record the sale agreement and the first two instalments using the net-interest method?

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Definitions:

Conversion Costs

The combined costs of direct labor and manufacturing overhead, representing the expenditures to convert raw materials into finished goods.

Conversion Costs

The combined costs of direct labor and manufacturing overhead, representing the expenses to convert raw materials into finished goods.

Cost Per Equivalent Unit

A calculation used in process costing, dividing the total cost by the number of units produced to determine the cost per unit.

Conversion Costs

Costs required to convert raw materials into finished products, usually including direct labor and manufacturing overhead.