E9-1 (Lower-of-Cost-or-Market) The inventory of OhetoCompany on December 31, 2011, consistsofthe followingitems.
Part No. Quantity Cost per Unit Cost to Replace per Unit
110 600 $95 $100
111 1,000 60 52
112 500 80 76
113 200 170 180
120 400 205 208
121a 1,600 16 14
122 300 240 235
aPart No. 121 is obsolete and has a realizable value of $0.50 eachas scrap.
(a) Determine the inventory as of December 31, 2011, by thelower-of-cost-or-market method, applying
this method directly to each item.
(b) Determine the inventory by the lower-of-cost-or-market method,applying the method to the
total of the inventory.
E9-12 (Gross Profit Method) Astaire Company uses the grossprofit method to estimate inventory for monthly reportingpurposes. Presented below is information for the month of May.
Inventory, May 1 $ 160,000
Purchases (gross) 640,000
Sales returns 70,000
Purchase discounts 12,000
(a) Compute the estimated inventory at May 31, assuming that thegross profit is 25% of sales.
(b) Compute the estimated inventory at May 31, assuming that thegross profit is 25% of cost.
E10-5 (Treatment of Various Costs) Allegro Supply Company,a newly formed corporation, incurred the followingexpenditures related to Land, to Buildings, and to Machinery andEquipment.
Abstract company’s fee for title search $ 520
Architect’s fees 3,170
Cash paid for land and dilapidated building thereon 92,000
Removal of old building $20,000
Less: Salvage 5,500 14,500
Interest on short-term loans during construction 7,400
Excavation before construction for basement 19,000
Machinery purchased (subject to 2% cash discount, which was nottaken) 65,000
Freight on machinery purchased 1,340
Storage charges on machinery, necessitated by noncompletion of
building when machinery was delivered 2,180
New building constructed (building construction took 6 monthsfrom
date of purchase of land and old building) 485,000
Assessment by city for drainage project 1,600
Hauling charges for delivery of machinery from storage to newbuilding 620
Installation of machinery 2,000
Trees, shrubs, and other landscaping after completion ofbuilding
(permanent in nature) 5,400
Determine the amounts that should be debited to Land, to Buildings,and to Machinery and Equipment.
Assume the benefits of capitalizing interest during constructionexceed the cost of implementation. Indicate how any costs notdebited to these accounts should be recorded.
E10-12 (Entries for Asset Acquisition, IncludingSelf-Construction) Below are transactions related to ImpalaCompany.
(a) The City of Pebble Beach gives the company 5 acres of land as aplant site. The market value of
this land is determined to be $81,000.
(b) 14,000 shares of common stock with a par value of $50 per shareare issued in exchange for land
and buildings. The property has been appraised at a fair marketvalue of $810,000, of which
$180,000 has been allocated to land and $630,000 to buildings. Thestock of Impala Company is not listed on any exchange, but a blockof 100 shares was sold by a stockholder 12 months ago
at $65 per share, and a block of 200 shares was sold by anotherstockholder 18 months ago at
$58 per share.
(c) No entry has been made to remove from the accounts forMaterials, Direct Labor, and Overhead
the amounts properly chargeable to plant asset accounts formachinery constructed during the
year. The following information is given relative to costs of themachinery constructed.
Materials used $12,500
Factory supplies used 900
Direct labor incurred 16,000
Additional overhead (over regular) caused by construction 2,700
of machinery, excluding factory supplies used
Fixed overhead rate applied to regular manufacturing operations 60%of direct labor cost
Cost of similar machinery if it had been purchased from
outside suppliers 44,000
Prepare journal entries on the books of Impala Company to recordthese transactions
QUESTION TITLE :- ACC 422 Week 3 WileyPlus Assignment – Exercises