STAFFORD PRESS

1. The land at the old site, together with

the building thereon, was sold for
$149,860 cash.
2. Certain equipment was sold for
$35,200 cash. This equipment appeared
on the books at a cost of $73,645 less
accumulated depreciation of $40,890 for
a net book value of $32,755.
3. A new printing press was purchased. The invoice cost
of this equipment was $112,110. A 2 percent cash
discount was taken by Stafford Press so that only
$109,868 was actually paid to the seller. Stafford
Press also paid $450 to a trucker to have this
equipment delivered. Installation of this equipment
was made by Stafford Press employees who worked a
total of 60 hours. These workers received $15 per
hour in wages, but their time was ordinarily charged
to printing jobs at $ 30.50 per hour, the difference
representing a allowance for overhead ($12.15) and
profit ($3.35).
4. Stafford Press paid $140,000 to purchase land on
which the new plant was to be built. A rundown
building, which Stafford’s appraiser said had no value,
was standing on the plot of land. Stafford Press paid
$21,235 to have the old building on the plot of land
torn down. In addition, the company paid $13,950 to
have permanent drainage facilities installed on the
new land.
5. A new composing machine was an invoice cost of $
28,030 was purchased. The company paid $20,830
cash and received a trade in allowances of $7,200 on
a used piece of equipment. The used equipment
could have been sold outright for not more than
$6,050. It had cost $12,000 new, and accumulated
depreciation on it was $5,200, making the net book
value $6,800.
6. The company erected a building at the new site for
$561,000. Of this amount, $136,000 was paid in cash
and $425,000 was borrowed on a mortgage.
7. Trucking and other costs associated with moving equipment from the old location to the new
location and installing it were $8,440. In addition, Stafford press employees worked an estimated
125 hours on that part of the move that related to equipment.
8. During the moving operation, a piece of equipment costing $10,000 was dropped and damaged;
$3,220 was spent to repair it. Management believed, however, that the salvage value of this
equipment had been reduced by $660 from the original estimate of $1,950 to $1,290. Up until
that time, the equipment was being depreciated at $805 per year, representing a 10 percent rate
after deduction of estimated salvage of $1,950. Accumulated depreciation was $3,220.

STAFFORD PRESS

Condensed Balance Sheet

 (Prior to Move)

ASSETS LAIBILTIES AND OWNER’S EQUITY

Current Assets: Current Liabilities $160,223

Cash $395,868 Common Stock $400,000

Other current Assets $251,790 Retained Earnings $358,648

Total Current Assets $647,658

Property and Equipment:

Land $34,034

Buildings $350,064

Less: Accu. Depreciation $199,056 $151,008

Equipment $265,093

Less: Accu. Depreciation $178,922 $86,171

$918,871 $918,871