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* Question 2
Presented below is information related to Rembrandt Inc.’s inventory.
(per unit) Skis Boots Parkas
Historical cost \$211.47 \$117.98 \$58.99
Selling price 241.52 161.39 82.08
Cost to distribute 21.15 8.90 2.78
Current replacement cost 225.94 116.87 56.76
Normal profit margin 35.62 32.28 23.65
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 \$

Question 3
Matlock Company uses a perpetualinventorysystem. Its beginning inventory consists of 61 units that cost \$37 each. During June, the company purchased 183 units at \$37 each, returned 7 units for credit, and sold 153 units at \$61 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 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 averagecostmethod. (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 \$

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 \$16 \$4,000
April 15 purchase 400 20 8,000
April 23 purchase 350 21 7,350
1,000 \$19,350
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) 780 \$8.00
Purchases:
January 5, 2012 1,560 9.00
January 25, 2012 1,690 10.00
February 16, 2012 1,040 11.00
March 26, 2012 780 12.00
A physical inventory on March 31, 2012, shows 2,080 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
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
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.)
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 \$

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 Margin
Jokers \$2,644 \$2,710 \$2,776 \$2,115
Penguins 6,610 6,742 6,544 5,420
Riddlers 5,817 6,015 6,114 4,891
Scarecrows 4,230 3,953 5,063 4,059
Determine the final lower of cost or marketinventoryvalue for each item.
Jokers \$

Penguins \$

Riddlers \$

Scarecrows \$

Question 8
Kumar Inc. uses a perpetual inventory system. At January 1, 2013, inventory was \$278,200 at both cost and market value. At December 31, 2013, the inventory was \$371,800 at cost and \$349,700 at market value. Prepare the necessary December 31 entry under:
(a) the cost of goods sold method

Description/Account Debit Credit

(b) the loss method

Description/Account Debit Credit

Question 9
Boyne Inc. had beginning inventory of \$15,720 at cost and \$26,200 at retail. Net purchases were \$157,200 at cost and \$222,700 at retail. Net markups were \$13,100; net markdowns were \$9,170; and sales were \$205,670. 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 \$195,200
Purchases (gross) 780,800
Freight-in 36,600
Sales 1,220,000
Sales returns 85,400
Purchase discounts 14,640
(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 \$27,390. Closing costs were \$1,460. An old building was removed at a cost of \$14,160. What amount should be recorded as the cost of the land
\$

Question 12
Garcia Corporation purchased a truck by issuing an \$104,800, 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 Credit

Question 13
Mohave Inc. purchased land, building, and equipment from Laguna Corporation for a cash payment of \$412,650. The estimated fair values of the assets are land \$78,600, building \$288,200, and equipment \$104,800. At what amounts should each of the three assets be recorded? (Note: Do not round the computation of the % of total.)
Recorded Amount
Land \$

Building \$

Equipment \$

Question 14
Fielder Company obtained land by issuing 2,000 shares of its \$15 par value common stock. The land was recently appraised at \$124,100. The common stock is actively traded at \$60 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 Credit

Question 15
Navajo Corporation traded a used truck (cost \$26,200, accumulated depreciation \$23,580) for a small computer worth \$4,847. Navajo also paid \$1,310 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 Credit

Question 16
Mehta Company traded a used welding machine (cost \$10,530, accumulated depreciation \$3,510) for office equipment with an estimated fair value of \$5,850. Mehta also paid \$3,510 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 Credit

Question 18
Fernandez Corporation purchased a truck at the beginning of 2012 for \$49,980. The truck is estimated to have a salvage value of \$2,380 and a useful life of 190,400 miles. It was driven 27,370 miles in 2012 and 36,890 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 \$61,800. The machinery is estimated to have a salvage value of \$6,180 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 \$1,235,700 and has accumulated depreciation of \$494,280. The expected future net cash flows from the use of the asset are expected to be \$686,500. The fair value of the equipment is \$549,200. Prepare the journal entry, if any, to record the impairment loss.
Description/Account Debit Credit

Question 21
Everly Corporation acquires a coal mine at a cost of \$536,800. Intangible development costs total \$134,200. After extraction has occurred, Everly must restore the property (estimated fair value of the obligation is \$107,360), after which it can be sold for \$214,720. Everly estimates that 5,368 tons of coal can be extracted. If 939 tons are extracted the first year, prepare the journal entry to record depletion.
Description/Account Debit Credit

Question 22
Francis Corporation purchased an asset at a cost of \$67,700 on March 1, 2012. The asset has a useful life of 8 years and a salvage value of \$6,770. 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 \$

uestion 23
Celine Dion Corporation purchases a patent from Salmon Company on January 1, 2012, for \$50,180. 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 Credit

(To record purchase of patent.)

(To record amortization.)

Question 24
Karen Austin Corporation has capitalized software costs of \$701,400, and sales of this product the first year totaled \$420,090. Karen Austin anticipates earning \$980,210 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 26
Roley Corporation uses a periodic inventory system and the gross method of accounting for purchase discounts. On July 1, Roley purchased \$80,000 of inventory, terms 2/10, n/30, FOB shipping point. Roley paid freight costs of \$1,290. On July 3, Roley returned damaged goods and received credit of \$8,000. 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 Credit
July 1

Freight-in

July 3

July 10

Question 27
Takemoto Corporation borrowed \$106,800 on November 1, 2012, by signing a \$109,203, 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 Credit
11/1/12

12/31/12

2/1/13

Cash

Question 28
Whiteside Corporation issues \$682,000 of 9% bonds, due in 12 years, with interest payable semiannually. 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 29
Indiana Jones Company enters into a 7-year lease of equipment on January 1, 2012, which requires 7 annual payments of \$35,940 each, beginning January 1, 2012. In addition, the lessee guarantees a residual value of \$20,000 at lease-end. The equipment has a useful life of 7 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 \$197,619. Prepare Lost Ark’s January 1, 2012, journal entries.
Description Debit Credit
\$
\$
(To record the lease)
\$
\$
(To record first lease payment)

Question 29
Indiana Jones Company enters into a 7-year lease of equipment on January 1, 2012, which requires 7 annual payments of \$35,940 each, beginning January 1, 2012. In addition, the lessee guarantees a residual value of \$20,000 at lease-end. The equipment has a useful life of 7 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 \$197,619. Prepare Lost Ark’s January 1, 2012, journal entries.
Description Debit Credit
\$
\$
(To record the lease)
\$
\$
(To record first lease payment)