1.Skysong Company follows the practice of pricing its inventory at LCNRV, on an individual-item basis.
| Item No. | Quantity | Cost per Unit | Estimated Selling Price | Cost to Complete and Sell | ||||
| 1320 | 1,500 | $3.55 | $5.00 | $1.78 | ||||
| 1333 | 1,200 | 3.00 | 3.77 | 1.11 | ||||
| 1426 | 1,100 | 5.00 | 5.55 | 1.55 | ||||
| 1437 | 1,300 | 4.00 | 3.55 | 1.50 | ||||
| 1510 | 1,000 | 2.50 | 3.61 | 1.55 | ||||
| 1522 | 800 | 3.33 | 4.33 | 0.89 | ||||
| 1573 | 3,300 | 2.00 | 2.78 | 1.33 | ||||
| 1626 | 1,300 | 5.22 | 6.66 | 1.67 |
From the information above, determine the amount of Skysong Company inventory.
| The amount of Skysong Company’s inventory | $ |
2. Sarasota Company follows the practice of pricing its inventory at the lower-of-cost-or-market, on an individual-item basis.
| Item No. | Quantity | Cost per Unit | Cost to Replace | Estimated Selling Price | Cost of Completion and Disposal | Normal Profit | ||||||||||||
| 1320 | 1,900 | $3.62 | $3.39 | $5.09 | $0.40 | $1.41 | ||||||||||||
| 1333 | 1,600 | 3.05 | 2.60 | 3.96 | 0.57 | 0.57 | ||||||||||||
| 1426 | 1,500 | 5.09 | 4.18 | 5.65 | 0.45 | 1.13 | ||||||||||||
| 1437 | 1,700 | 4.07 | 3.50 | 3.62 | 0.28 | 1.02 | ||||||||||||
| 1510 | 1,400 | 2.54 | 2.26 | 3.67 | 0.90 | 0.68 | ||||||||||||
| 1522 | 1,200 | 3.39 | 3.05 | 4.29 | 0.45 | 0.57 | ||||||||||||
| 1573 | 3,700 | 2.03 | 1.81 | 2.83 | 0.85 | 0.57 | ||||||||||||
| 1626 | 1,700 | 5.31 | 5.88 | 6.78 | 0.57 | 1.13 |
From the information above, determine the amount of Sarasota Company inventory.
| The amount of Sarasota Company’s inventory | $ |
3. Metlock Realty Corporation purchased a tract of unimproved land for $52,000. This land was improved and subdivided into building lots at an additional cost of $27,000. These building lots were all of the same size but owing to differences in location were offered for sale at different prices as follows.
| Group | No. of Lots | Price per Lot | ||||
| 1 | 9 | $5,700 | ||||
| 2 | 15 | 7,600 | ||||
| 3 | 15 | 4,560 |
Operating expenses for the year allocated to this project total $16,000. Lots unsold at the year-end were as follows.
| Group 1 | 5 lots | |
| Group 2 | 7 lots | |
| Group 3 | 2 lots |
At the end of the fiscal year Metlock Realty Corporation instructs you to arrive at the net income realized on this operation to date.
| Net income | $ |
4. Newman Legler requires an estimate of the cost of goods lost by fire on March 9. Merchandise on hand on January 1 was $34,600. Purchases since January 1 were $71,200; freight-in, $3,600; purchase returns and allowances, $2,700. Sales are made at 33 1/3% above cost and totaled $105,300 to March 9. Goods costing $11,400 were left undamaged by the fire; remaining goods were destroyed.
Compute the cost of goods destroyed. (Round gross profit percentage and final answer to 0 decimal places, e.g. 15% or 125.)
| Cost of goods destroyed | $ |
Compute the cost of goods destroyed, assuming that the gross profit is 33 1/3% of sales. (Round ratios for computational purposes to 5 decimal places, e.g. 78.72345% and final answer to 0 decimal places, e.g. 28,987.)
| Cost of goods destroyed | $ |
5. Presented below is information related to Splish Company.
| Cost | Retail | |||
| Beginning inventory | $103,820 | $278,000 | ||
| Purchases | 1,402,000 | 2,152,000 | ||
| Markups | 93,600 | |||
| Markup cancellations | 13,900 | |||
| Markdowns | 34,600 | |||
| Markdown cancellations | 5,000 | |||
| Sales revenue | 2,206,000 |
Compute the inventory by the conventional retail inventory method. (Round ratios for computational purposes to 0 decimal places, e.g. 78% and final answer to 0 decimal places, e.g. 28,987.)
| Ending inventory using conventional retail inventory method | $
|
6. Bonita Company determined its ending inventory at cost and at LCNRV at December 31, 2017, December 31, 2018, and December 31, 2019, as shown below.
| Cost | NRV | ||||
| 12/31/17 | $607,100 | $607,100 | |||
| 12/31/18 | 828,900 | 759,400 | |||
| 12/31/19 | 841,400 | 764,600 |
Prepare the journal entries required at December 31, 2018, and at December 31, 2019, assuming that a perpetual inventory system and the cost-of-goods-sold method of adjusting to LCNRV is used. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select “No entry” for the account titles and enter 0 for the amounts.)
| Date | Account Titles and Explanation | Debit | Credit |
| 12/31/18 | |||
| 12/31/19 | |||
7. Cheyenne Company lost most of its inventory in a fire in December just before the year-end physical inventory was taken. Corporate records disclose the following.
| Inventory (beginning) | $ 81,600 | Sales revenue | $410,400 | ||||
| Purchases | 287,000 | Sales returns | 20,700 | ||||
| Purchase returns | 27,800 | Gross profit % based on net selling price | 33 | % |
Merchandise with a selling price of $29,700 remained undamaged after the fire, and damaged merchandise has a net realizable value of $8,100. The company does not carry fire insurance on its inventory. Compute the amount of inventory fire loss. (Do not use the retail inventory method.)
| Inventory fire loss | $
|
8. Bridgeport Specialty Company, a division of Lost World Inc., manufactures three models of gear shift components for bicycles that are sold to bicycle manufacturers, retailers, and catalog outlets. Since beginning operations in 1993, Bridgeport has used normal absorption costing and has assumed a first-in, first-out cost flow in its perpetual inventory system. The balances of the inventory accounts at the end of Bridgeport’s fiscal year, November 30, 2017, are shown below. The inventories are stated at cost before any year-end adjustments.
| Finished goods | $648,200 | |
| Work in process | 102,800 | |
| Raw materials | 285,600 | |
| Factory supplies | 68,300 |
The following information relates to Bridgeport’s inventory and operations. 1. The finished goods inventory consists of the items analyzed below.
| Cost | NRV | |||
| Down tube shifter | ||||
| Standard model | $66,700 | $66,200 | ||
| Click adjustment model | 97,900 | 94,600 | ||
| Deluxe model | 98,200 | 100,200 | ||
| Total down tube shifters | 262,800 | 261,000 | ||
| Bar end shifter | ||||
| Standard model | 88,500 | 91,100 | ||
| Click adjustment model | 105,000 | 103,600 | ||
| Total bar end shifters | 193,500 | 194,700 | ||
| Head tube shifter | ||||
| Standard model | 81,600 | 81,300 | ||
| Click adjustment model | 110,300 | 112,500 | ||
| Total head tube shifters | 191,900 | 193,800 | ||
| Total finished goods | $648,200 | $649,500 |
| 2. | One-half of the head tube shifter finished goods inventory is held by catalog outlets on consignment. | |
| 3. | Three-quarters of the bar end shifter finished goods inventory has been pledged as collateral for a bank loan. | |
| 4. | One-half of the raw materials balance represents derailleurs acquired at a contracted price 20% above the current market price. The NRV of the rest of the raw materials is $121,300. | |
| 5. | The total NRV of the work in process inventory is $101,100. | |
| 6. | Included in the cost of factory supplies are obsolete items with an historical cost of $4,700. The market value of the remaining factory supplies is $65,400. | |
| 7. | Bridgeport applies the LCNRV method to each of the three types of shifters in finished goods inventory. For each of the other three inventory accounts, Bridgeport applies the LCNRV method to the total of each inventory account. | |
| 8. | Consider all amounts presented above to be material in relation to Bridgeport’s financial statements taken as a whole. |
(a) Prepare the inventory section of Bridgeport’s balance sheet as of November 30, 2018. (Round answers to 0 decimal places, e.g. 2,556.)
| Bridgeport Specialty Company Balance Sheet November 30, 2018 | ||||||
| $
|
||||||
| $
|
9. Martinez Corporation operates a retail computer store. To improve delivery services to customers, the company purchases four new trucks on April 1, 2017. The terms of acquisition for each truck are described below.
| 1. | Truck #1 has a list price of $42,150 and is acquired for a cash payment of $39,059. | |
| 2. | Truck #2 has a list price of $44,960 and is acquired for a down payment of $5,620 cash and a zero-interest-bearing note with a face amount of $39,340. The note is due April 1, 2018. Martinez would normally have to pay interest at a rate of 10% for such a borrowing, and the dealership has an incremental borrowing rate of 8%. | |
| 3. | Truck #3 has a list price of $44,960. It is acquired in exchange for a computer system that Martinez carries in inventory. The computer system cost $33,720 and is normally sold by Martinez for $42,712. Martinez uses a perpetual inventory system. | |
| 4. | Truck #4 has a list price of $39,340. It is acquired in exchange for 900 shares of common stock in Martinez Corporation. The stock has a par value per share of $10 and a market price of $13 per share. |
Prepare the appropriate journal entries for the above transactions for Martinez Corporation. (Round present value factors to 5 decimal places, e.g. 0.52587 and final answers to 0 decimal places, e.g. 5,275. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select “No Entry” for the account titles and enter 0 for the amounts.)
| No. | Account Titles and Explanation | Debit | Credit |
| 1. | |||
| 2. | |||
| 3. | |||
| 4. | |||
10. Plant acquisitions for selected companies are as follows. 1. Ayayai Industries Inc. acquired land, buildings, and equipment from a bankrupt company, Torres Co., for a lump-sum price of $924,000. At the time of purchase, Torres’s assets had the following book and appraisal values.
| Book Values | Appraisal Values | |||||
| Land | $264,000 | $198,000 | ||||
| Buildings | 330,000 | 462,000 | ||||
| Equipment | 396,000 | 396,000 |
To be conservative, the company decided to take the lower of the two values for each asset acquired. The following entry was made.
| Land | 198,000 | |||
| Buildings | 330,000 | |||
| Equipment | 396,000 | |||
| Cash | 924,000 |
2. Pina Enterprises purchased store equipment by making a $2,640 cash down payment and signing a 1-year, $30,360, 10% note payable. The purchase was recorded as follows.
| Equipment | 36,036 | |||
| Cash | 2,640 | |||
| Notes Payable | 30,360 | |||
| Interest Payable | 3,036 |
3. Grouper Company purchased office equipment for $19,400, terms 2/10, n/30. Because the company intended to take the discount, it made no entry until it paid for the acquisition. The entry was:
| Equipment | 19,400 | |||
| Cash | 19,012 | |||
| Purchase Discounts | 388 |
4. Monty Inc. recently received at zero cost land from the Village of Cardassia as an inducement to locate its business in the Village. The appraised value of the land is $35,640. The company made no entry to record the land because it had no cost basis. 5. Flounder Company built a warehouse for $792,000. It could have purchased the building for $976,800. The controller made the following entry.
| Buildings | 976,800 | |||
| Cash | 792,000 | |||
| Profit on Construction | 184,800 |
Prepare the entry that should have been made at the date of each acquisition. (Round intermediate calculations to 5 decimal palces, e.g. 0.56487 and final answers to 0 decimal places, e.g. 5,275. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select “No Entry” for the account titles and enter 0 for the amounts.)
| No. | Account Titles and Explanation | Debit | Credit |
| 1. | |||
| 2. | |||
| 3. | |||
| 4. | |||
| 5. | |||
11. The following three situations involve the capitalization of interest. Situation I On January 1, 2017, Coronado, Inc. signed a fixed-price contract to have Builder Associates construct a major plant facility at a cost of $4,443,000. It was estimated that it would take 3 years to complete the project. Also on January 1, 2017, to finance the construction cost, Coronado borrowed $4,443,000 payable in 10 annual installments of $444,300, plus interest at the rate of 10%. During 2017, Coronado made deposit and progress payments totaling $1,666,125 under the contract; the weighted-average amount of accumulated expenditures was $888,600 for the year. The excess borrowed funds were invested in short-term securities, from which Coronado realized investment income of $270,600. What amount should Coronado report as capitalized interest at December 31, 2017?
| Capitalized interest | $
|
Situation II During 2017, Whispering Corporation constructed and manufactured certain assets and incurred the following interest costs in connection with those activities.
| Interest Costs Incurred | |||
| Warehouse constructed for Whispering’s own use | $34,410 | ||
| Special-order machine for sale to unrelated customer, produced according to customer’s specifications | 9,810 | ||
| Inventories routinely manufactured, produced on a repetitive basis | 8,630 |
All of these assets required an extended period of time for completion. Assuming the effect of interest capitalization is material, what is the total amount of interest costs to be capitalized?
| The total amount of interest costs to be capitalized | $
|
Situation III Metlock, Inc. has a fiscal year ending April 30. On May 1, 2017, Metlock borrowed $9,658,000 at 11% to finance construction of its own building. Repayments of the loan are to commence the month following completion of the building. During the year ended April 30, 2018, expenditures for the partially completed structure totaled $6,760,600. These expenditures were incurred evenly throughout the year. Interest earned on the unexpended portion of the loan amounted to $627,770 for the year. How much should be shown as capitalized interest on Metlock’s financial statements at April 30, 2018?
| Capitalized interest on Metlock’s financial statements | $
|
12.
|
|
|
|
13. Crane Corporation, which manufactures shoes, hired a recent college graduate to work in its accounting department. On the first day of work, the accountant was assigned to total a batch of invoices with the use of an adding machine. Before long, the accountant, who had never before seen such a machine, managed to break the machine. Crane Corporation gave the machine plus $476 to Cheyenne Business Machine Company (dealer) in exchange for a new machine. Assume the following information about the machines.
| Crane Corp. (Old Machine) | Cheyenne Co. (New Machine) | |||||
| Machine cost | $406 | $378 | ||||
| Accumulated depreciation | 196 | –0– | ||||
| Fair value | 119 | 595 |
For each company, prepare the necessary journal entry to record the exchange. (The exchange has commercial substance.) (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select “No Entry” for the account titles and enter 0 for the amounts.)
| Account Titles and Explanation | Debit | Credit |
| Crane Corporation | ||
| Cheyenne Business Machine Company | ||
14. On April 1, 2017, Oriole Company received a condemnation award of $541,800 cash as compensation for the forced sale of the company’s land and building, which stood in the path of a new state highway. The land and building cost $75,600 and $352,800, respectively, when they were acquired. At April 1, 2017, the accumulated depreciation relating to the building amounted to $201,600. On August 1, 2017, Oriole purchased a piece of replacement property for cash. The new land cost $113,400, and the new building cost $504,000. Prepare the journal entries to record the transactions on April 1 and August 1, 2017. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select “No Entry” for the account titles and enter 0 for the amounts.)
| Date | Account Titles and Explanation | Debit | Credit |
| April 1 | |||
| Aug. 1 | |||
15.
"Looking for a Similar Assignment? Get Expert Help at an Amazing Discount!"
