Acc422 Intermediate Accounting: Week 3 Assignment (E9-1, E9-12, E10-5, E10-12)

Acc422 Intermediate Accounting (December 2013 Version)
Week 3 Assignment



E9-1

The inventory of Oheto Company on December 31, 2013, consists of the following items.

Part No. Quantity Cost per Unit Cost to Replace per Unit

110 690 131 138

111 1,050 83 72

112 550 110 105

113 260 235 248

120 420 283 287

121a 1,670 22 19

122 360 331 324

a Part No. 121 is obsolete and has a realizable value of $0.7 each as scrap.



Instructions:

(a) Determine the inventory as of December 31, 2013, by the lower-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

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 1 172,000

Purchases (gross) 643,800

Freight-in 30,500

Sales 1,091,300

Sales returns 76,800

Purchase discounts 12,320



Instructions:

(a) Compute the estimated inventory at May 31, assuming that the gross profit is 25% of sales.

(b) Compute the estimated inventory at May 31, assuming that the gross profit is 25% of cost.



E10-5

Allegro Supply Company, a newly formed corporation, incurred the following expenditures related to Land, to Buildings, and to Machinery and Equipment.

Abstract company's fee for title search 572

Architect's fees 3,487

Cash paid for land and dilapidated building thereon 101,200

Removal of old building 22,000

Less: Salvage 6,050 15,950

Interest on short-term loans during construction 8,140

Excavation before construction for basement 20,900

Machinery purchased (subject to 2% cash discount, which was not taken) 71,500

Freight on machinery purchased 1,474

Storage charges on machinery, necessitated by noncompletion of

building when machinery was delivered 2,398

New building constructed (building construction took 6 months from

date of purchase of land and old building) 533,500

Assessment by city for drainage project 1,760

Hauling charges for delivery of machinery from storage to new building 682

Installation of machinery 2,200

Trees, shrubs, and other landscaping after completion of building

(permanent in nature) 5,940



Determine the amounts that should be debited to Land, to Buildings, and to Machinery and Equipment. Assume the benefits of capitalizing interest during construction exceed the cost of implementation.



E10-12

Below are transactions related to Impala Company.

a. The City of Pebble Beach gives the company 5 acres of land as a plant site. The market value of this land is determined to be $90,000.

b. 14,000 shares of common stock with a par value of $55 per share are issued in exchange for land and buildings. The property has been appraised at a fair market value of $900,000, of which $186,500 has been allocated to land and $713,500 to buildings. The stock of Impala Company is not listed on any exchange, but a block of 100 shares was sold by a stockholder 12 months ago at $71 per share, and a block of 200 shares was sold by another stockholder 18 months ago at $63 per share.

c. No entry has been made to remove from the accounts for Materials, Direct Labor, and Overhead the amounts properly chargeable to plant asset accounts for machinery constructed during the year. The following information is given relative to costs of the machinery constructed.

Materials used 13,320

Factory supplies used 920

Direct labor incurred 16,820

Additional overhead (over regular) caused by construction

of machinery, excluding factory supplies used 2,610

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 44,270



Instructions:

Prepare journal entries on the books of Impala Company to record these transactions. (List multiple debit/credit entries from largest to smallest amount, e.g. 10, 5, 2.)
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