Presented below is information related to Rembrandt Inc.'s inventory.
(per unit) / Skis / Boots / Parkas
Historical cost / $199.69 / $111.41 / $55.70
Selling price / 228.07 / 152.40 / 77.51
Cost to distribute / 19.97 / 8.41 / 2.63
Current replacement cost / 213.35 / 110.36 / 53.60
Normal profit margin / 33.63 / 30.48 / 22.33
Determine the following:
(a) / the two limits to market value (e.g., the ceiling and the floor) that should be used in the lower of cost or market computation for skis;(Round answers to 2 decimal places, e.g. 20.25.)
Ceiling / $
Floor / $
(b) / the cost amount that should be used in the lower of cost or market comparison of boots;(Round answer to 2 decimal places, e.g. 20.25.)
Cost amount / $
(c) / the market amount that should be used to value parkas on the basis of the lower of cost or market.(Round answer to 2 decimal places, e.g. 20.25.)
Market amount / $
/
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/ * Question 3
Matlock Company uses a perpetual inventory system. Its beginning inventory consists of 72 units that cost $43 each. During June, the company purchased 217 units at $43 each, returned 9 units for credit, and sold 181 units at $72 each. Journalize the June transactions.
Description/Account / Debit / Credit
/
/
(To record inventory purchased.)
/
/
(To record inventory returned.)
/
/
(To record inventory sold.)
/
/
(To record cost of goods sold.)
/
* Question 4
Amsterdam Company uses a periodic inventory system. For April, when the company sold 700 units, the following information is available.
Units / Unit Cost / Total CostApril 1 inventory / 250 / $13 / $3,250
April 15 purchase / 400 / 15 / 6,000
April 23 purchase / 350 / 16 / 5,600
1,000 / $14,850
Compute the April 30 inventory and the April cost of goods sold using the average cost method.(Round computations for cost per unit to 2 decimal places, e.g. 10.25 and answers to 0 decimal places, e.g. 2,250.)
Inventory / $Cost of goods sold / $
Question 5
Amsterdam Company uses a periodic inventory system. For April, when the company sold 600 units, the following information is available.
Units / Unit Cost / Total Cost
April 1 inventory / 250 / $15 / $3,750
April 15 purchase / 400 / 18 / 7,200
April 23 purchase / 350 / 20 / 7,000
1,000 / $17,950
Compute the April 30 inventory and the April cost of goods sold using the FIFO method.
Inventory / $
Cost of goods sold / $
/
Question 6
(FIFO, LIFO, Average Cost Inventory)
Esplanade Company was formed on December 1, 2011. The following information is available from Esplanade's inventory records for Product BAP.
Units / Unit Cost
January 1, 2012 (beginning inventory) / 792 / $8.00
Purchases:
January 5, 2012 / 1,584 / 9.00
January 25, 2012 / 1,716 / 10.00
February 16, 2012 / 1,056 / 11.00
March 26, 2012 / 792 / 12.00
A physical inventory on March 31, 2012, shows 2,112 units on hand.
Prepare schedules to compute the ending inventory at March 31, 2012, under each of the following inventory methods. Assume Esplanade Company uses the periodic inventory method.
(a) / FIFO
ESPLANADE COMPANY
Computation of Inventory for Product BAP
BAP under FIFO Inventory Method
March 31, 2012
Units / Unit Cost / Total Cost
March 26, 2012 / / $ / $
February 16, 2012 / / /
January 25, 2012 / / /
March 31, 2012, inventory / / $
(b) / LIFO
ESPLANADE COMPANY
Computation of Inventory for Product BAP
BAP under LIFO Inventory Method
March 31, 2012
Units / Unit Cost / Total Cost
Beginning inventory / / $ / $
January 5, 2012 / / /
March 31, 2012, inventory / / $
(c) / Weighted average(Round weighted average cost to 2 decimal places, e.g. 2.25 and use this rounded amount for future calculations. Round the inventory on March to 0 decimal places, e.g. 1,250.)
ESPLANADE COMPANY
Computation of Inventory for Product BAP
BAP under Weighted Average Inventory Method
March 31, 2012
Units / Unit Cost / Total Cost
Beginning inventory / / $ / $
January 5, 2012 / / /
January 25, 2012 / / /
February 16, 2012 / / /
March 26, 2012 / / /
/ $
Weighted Average cost / $
March 31, 2012, inventory / $
/
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Question 7
Floyd Corporation has the following four items in its ending inventory.
Item / Cost / Replacement Cost / Net Realizable Value (NRV) / NRV Less Normal Profit MarginJokers / $2,030 / $2,081 / $2,132 / $1,624
Penguins / 5,075 / 5,177 / 5,024 / 4,162
Riddlers / 4,466 / 4,618 / 4,694 / 3,756
Scarecrows / 3,248 / 3,035 / 3,887 / 3,116
Determine the final lower of cost or market inventory value for each item.
Jokers / $Penguins / $
Riddlers / $
Scarecrows / $
Question 8
Kumar Inc. uses a perpetual inventory system. At January 1, 2013, inventory was $245,030 at both cost and market value. At December 31, 2013, the inventory was $327,470 at cost and $308,005 at market value. Prepare the necessary December 31 entry under:
(a) / the cost of goods sold methodDescription/Account / Debit / Credit
Inventory Cash Loss due to market decline of inventory Sales Allowance to reduce inventory to market Gain due to market increase of inventory Cost of goods sold /
Cash Sales Loss due to market decline of inventory Inventory Gain due to market increase of inventory Cost of goods sold Allowance to reduce inventory to market /
(b) / the loss method
Description/Account / Debit / Credit
Inventory Cost of goods sold Allowance to reduce inventory to market Sales Gain due to market increase of inventory Cash Loss due to market decline of inventory /
Cash Allowance to reduce inventory to market Loss due to market decline of inventory Inventory Cost of goods sold Sales Gain due to market increase of inventory /
Question 9
Boyne Inc. had beginning inventory of $15,360 at cost and $25,600 at retail. Net purchases were $153,600 at cost and $217,600 at retail. Net markups were $12,800; net markdowns were $8,960; and sales were $200,960. Compute ending inventory at cost using the conventional retail method.(Round computation for cost-to-retail ratio percentage and answer to 0 decimal places, e.g. 25,250.)
Ending inventory / $Question 10
(Gross Profit Method)
Astaire Company uses the gross profit method to estimate inventory for monthly reporting purposes. Presented below is information for the month of May.
Inventory, May 1 / $201,600Purchases (gross) / 806,400
Freight-in / 37,800
Sales / 1,260,000
Sales returns / 88,200
Purchase discounts / 15,120
(a) / Compute the estimated inventory at May 31, assuming that the gross profit is 25% of sales.
Inventory / $
(b) / Compute the estimated inventory at May 31, assuming that the gross profit is 25% of cost.
Inventory / $
Question 11
Previn Brothers Inc. purchased land at a price of $29,030. Closing costs were $3,350. An old building was removed at a cost of $11,670. What amount should be recorded as the cost of the land?
$
Question 12Garcia Corporation purchased a truck by issuing an $115,200, 4-year, zero-interest-bearing note to Equinox Inc. The market rate of interest for obligations of this nature is 10%. Prepare the journal entry to record the purchase of this truck.(Round answers to 0 decimal places, e.g. 15,510. List multiple debit/credit entries from largest to smallest amount, e.g. 10, 5, 2. Hint: Use tables in text.)
Description/Account / Debit / CreditNotes receivable Depreciation expense Truck Discount on notes payable Cash Notes payable /
Depreciation expense Cash Truck Discount on notes payable Notes receivable Notes payable /
Notes payable Cash Truck Discount on notes payable Notes receivable Depreciation expense /
Question 13
Mohave Inc. purchased land, building, and equipment from Laguna Corporation for a cash payment of $330,750. The estimated fair values of the assets are land $63,000, building $231,000, and equipment $84,000. At what amounts should each of the three assets be recorded?(Note: Do not round the computation of the % of total.)
Recorded AmountLand / $
Building / $
Equipment / $
Question 14
Fielder Company obtained land by issuing 2,000 shares of its $12 par value common stock. The land was recently appraised at $102,000. The common stock is actively traded at $49 per share. Prepare the journal entry to record the acquisition of the land.(List multiple debit/credit entries from largest to smallest amount, e.g. 10, 5, 2.)
Description/Account / Debit / CreditPaid-in capital in excess of par Land Common stock Additional paid-in capital Cash /
Paid-in capital in excess of par Land Additional paid-in capital Cash Common stock /
Paid-in capital in excess of par Common stock Cash Additional paid-in capital Land /
Question 15
Navajo Corporation traded a used truck (cost $23,000, accumulated depreciation $20,700) for a small computer worth $4,255. Navajo also paid $1,150 in the transaction. Prepare the journal entry to record the exchange. (The exchange has commercial substance.)(List multiple debit/credit entries from largest to smallest amount, e.g. 10, 5, 2.)
Description/Account / Debit / CreditTruck Accumulated depreciation Cash Gain on disposal of truck Computer /
Accumulated depreciation Truck Cash Gain on disposal of truck Computer /
Gain on disposal of truck Truck Accumulated depreciation Computer Cash /
Truck Gain on disposal of truck Cash Computer Accumulated depreciation /
Computer Truck Cash Gain on disposal of truck Accumulated depreciation /
Question 16
Mehta Company traded a used welding machine (cost $9,180, accumulated depreciation $3,060) for office equipment with an estimated fair value of $5,100. Mehta also paid $3,060 cash in the transaction. Prepare the journal entry to record the exchange. (The exchange has commercial substance.)(List multiple debit/credit entries from largest to smallest amount, e.g. 10, 5, 2.)
Description/Account / Debit / CreditGain on disposal of machine Accumulated depreciation Depreciation expense Office equipment Loss on disposal of machine Machine Cash /
Loss on disposal of machine Office equipment Depreciation expense Gain on disposal of machine Machine Accumulated depreciation Cash /
Office equipment Depreciation expense Loss on disposal of machine Machine Gain on disposal of machine Accumulated depreciation Cash /
Machine Gain on disposal of machine Office equipment Accumulated depreciation Loss on disposal of machine Cash Depreciation expense /
Gain on disposal of machine Cash Office equipment Loss on disposal of machine Machine Accumulated depreciation Depreciation expense /
Question 17
Depreciation is normally computed on the basis of the nearest
day and to the nearest dollar.full month and to the nearest cent.
full month and to the nearest dollar.
day and to the nearest cent.
Question 18
Fernandez Corporation purchased a truck at the beginning of 2012 for $46,200. The truck is estimated to have a salvage value of $2,200 and a useful life of 176,000 miles. It was driven 25,300 miles in 2012 and 34,100 miles in 2013. Compute depreciation expense for 2012 and 2013.(Round answers to 0 decimal places, i.e. 2,250.)
2012 / $2013 / $
Question 19
Lockhard Company purchased machinery on January 1, 2012, for $71,400. The machinery is estimated to have a salvage value of $7,140 after a useful life of 8 years.
(a) / Compute 2012 depreciation expense using the double-declining balance method.$
(b) / Compute 2012 depreciation expense using the double-declining balance method assuming the machinery was purchased on October 1, 2012.(Round answer to 0 decimal places, i.e. 2,250.)
$
Question 20
Jurassic Company owns machinery that cost $1,080,000 and has accumulated depreciation of $432,000. The expected future net cash flows from the use of the asset are expected to be $600,000. The fair value of the equipment is $480,000. Prepare the journal entry, if any, to record the impairment loss.
Description/Account / Debit / CreditMachinery Cash Accumulated depreciation Depreciation expense Loss on impairment /
Loss on impairment Machinery Cash Depreciation expense Accumulated depreciation /
Question 21
Everly Corporation acquires a coal mine at a cost of $503,600. Intangible development costs total $125,900. After extraction has occurred, Everly must restore the property (estimated fair value of the obligation is $100,720), after which it can be sold for $201,440. Everly estimates that 5,036 tons of coal can be extracted. If 881 tons are extracted the first year, prepare the journal entry to record depletion.
Description/Account / Debit / CreditDevelopment costs Restoration costs Inventory Accumulated depletion /
Restoration costs Development costs Accumulated depletion Inventory /
Question 22
Francis Corporation purchased an asset at a cost of $57,800 on March 1, 2012. The asset has a useful life of 8 years and a salvage value of $5,780. For tax purposes, the MACRS class life is 5 years. Compute tax depreciation for each year 2012–2017.(Round answers to 0 decimal places.)
2012 / $2013 / $
2014 / $
2015 / $
2016 / $
2017 / $
Question 23
Celine Dion Corporation purchases a patent from Salmon Company on January 1, 2012, for $55,720. The patent has a remaining legal life of 16 years. Celine Dion feels the patent will be useful for 10 years. Prepare Celine Dion's journal entries to record the purchase of the patent and 2012 amortization.
Account/Description / Debit / CreditPatents Patent amortization expense Accumulated amortization Accounts payable Cash Accounts receivable /
Accounts receivable Accumulated amortization Cash Patent amortization expense Patents Accounts payable /
(To record purchase of patent.)
Accounts payable Patent amortization expense Patents Cash Accumulated amortization Accounts receivable /
Accumulated amortization Cash Patent amortization expense Accounts receivable Patents Accounts payable /
(To record amortization.)
Question 24
Karen Austin Corporation has capitalized software costs of $789,700, and sales of this product the first year totaled $408,900. Karen Austin anticipates earning $954,100 in additional future revenues from this product, which is estimated to have an economic life of 4 years. Compute the amount of software cost amortization for the first year.
(a) / Compute the amount of software cost amortization for the first year using the percent of revenue approach.$
(b) / Compute the amount of software cost amortization for the first year using the straight-line approach.
$
Question 25
Jeff Beck is a farmer who owns land which borders on the right-of-way of the Northern Railroad. On August 10, 2012, due to the admitted negligence of the Railroad, hay on the farm was set on fire and burned. Beck had had a dispute with the Railroad for several years concerning the ownership of a small parcel of land. The representative of the Railroad has offered to assign any rights which the Railroad may have in the land to Beck in exchange for a release of his right to reimbursement for the loss he has sustained from the fire. Beck appears inclined to accept the Railroad's offer. The Railroad's 2012 financial statements should include the following related to the incident:
creation of a liability only.
disclosure in note form only.
recognition of a loss only.
recognition of a loss and creation of a liability for the value of the land.
/
Question 26
Roley Corporation uses a periodic inventory system and the gross method of accounting for purchase discounts. On July 1, Roley purchased $66,000 of inventory, terms 2/10, n/30, FOB shipping point. Roley paid freight costs of $1,350. On July 3, Roley returned damaged goods and received credit of $6,600. On July 10, Roley paid for the goods. Prepare all necessary journal entries for Roley.(For multiple debit/credit entries, list amounts from largest to smallest, e.g. 10, 8, 6.)
Date / Description/Account / Debit / CreditJuly 1 / Purchase discounts Accounts payable Cash Purchase returns and allowances Purchases /
Accounts payable Purchases Purchase returns and allowances Purchase discounts Cash /
Freight-in /
Purchase discounts Cash Purchases Accounts payable Purchase returns and allowances /
July 3 / Cash Purchase returns and allowances Purchase discounts Accounts payable Purchases /
Purchase discounts Accounts payable Purchase returns and allowances Cash Purchases /
July 10 / Accounts payable Purchase discounts Cash Purchases Purchase returns and allowances /
Cash Purchase discounts Purchases Accounts payable Purchase returns and allowances /
Purchase returns and allowances Cash Accounts payable Purchase discounts Purchases /
Question 27
Takemoto Corporation borrowed $69,600 on November 1, 2012, by signing a $71,166, 3-month, zero-interest-bearing note. Prepare Takemoto's November 1, 2012, entry; the December 31, 2012, annual adjusting entry; and the February 1, 2013, entry.(For multiple debit/credit en tries, list amounts from largest to smallest, e.g. 10, 8, 6. Round all answers to 0 decimal places, e.g. 11,150.)
Date / Description/Account / Debit / Credit11/1/12 / Interest payable Discount on notes payable Cash Notes payable Notes receivable Interest expense /
Discount on notes payable Notes receivable Cash Notes payable Interest payable Interest expense /
Notes receivable Interest payable Notes payable Discount on notes payable Interest expense Cash /
12/31/12 / Cash Notes receivable Discount on notes payable Notes payable Interest expense Interest payable /
Notes receivable Interest payable Interest expense Cash Notes payable Discount on notes payable /
2/1/13 / Discount on notes payable Notes payable Interest expense Notes receivable Interest payable Cash /
Discount on notes payable Cash Interest expense Notes payable Notes receivable Interest payable /
Discount on notes payable Notes payable Notes receivable Interest expense Interest payable Cash /
Cash /
Question 28
Whiteside Corporation issues $675,000 of 9% bonds, due in 10 years, with interest payablesemiannually. At the time of issue, the annual market rate for such bonds is 10%. Compute the issue price of the bonds.(Use the present value tables in the text. Round your answer to zero decimal places, e.g. 2,510.)
$
Question 29Indiana Jones Company enters into a 6-year lease of equipment on January 1, 2012, which requires 6 annual payments of $35,340 each, beginning January 1, 2012. In addition, the lessee guarantees a residual value of $19,700 at lease-end. The equipment has a useful life of 6 years. Assume that for Lost Ark Company, the lessor, collectibility is reasonably predictable, there are no important uncertainties concerning costs, and the carrying amount of the machinery is $180,427. Prepare Lost Ark's January 1, 2012, journal entries.
Description / Debit / CreditLeased Machinery Under Capital Leases Rent Expense Lease Liability Machinery Interest Expense Interest Payable Lease Receivable Cash / $
Lease Receivable Cash Lease Liability Interest Payable Leased Machinery Under Capital Leases Machinery Interest Expense Rent Expense / $
(To record the lease)
Lease Liability Interest Expense Leased Machinery Under Capital Leases Rent Expense Cash Interest Payable Lease Receivable Machinery / $
Machinery Interest Payable Rent Expense Cash Interest Expense Lease Liability Lease Receivable Leased Machinery Under Capital Leases / $
(To record first lease payment)
Question 30
On January 1, 2012, Irwin Animation sold a truck to Peete Finance for $27,650 and immediately leased it back. The truck was carried on Irwin's books at $21,200. The term of the lease is 5 years, and title transfers to Irwin at lease-end. The lease requires five equal rental payments of $7,670 at the end of each year. The appropriate rate of interest is 12%, and the truck has a useful life of 5 years with no salvage value. Prepare Irwin's 2012 journal entries.(Round your answer to the nearest dollar eg 58,591.For multiple debit/credit entries, list amounts from largest to smallest eg 10, 5, 3, 2.)