WileyPlus WEEK2 Exercise Problems E9-3 E9-12 E9-19 E10-2 E10-23 E10-24
E9-3 Michael Bolton 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 1,200 $3.20 $3.00 $4.50 $0.35 $1.25
1333 900 2.70 2.30 3.50 0.50 0.50
1426 800 4.50 3.70 5.00 0.40 1.00
1437 1,000 3.60 3.10 3.20 0.25 0.90
1510 700 2.25 2.00 3.25 0.80 0.60
1522 500 3.00 2.70 3.80 0.40 0.50
1573 3,000 1.80 1.60 2.50 0.75 0.50
1626 1,000 4.70 5.20 6.00 0.50 1.00
From the information above, determine the amount of Bolton Company
inventory.
The amount of Bolton Company’s inventory $
E9-12 Mark Price 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 $ 160,000
Purchases
(gross) 640,000
Freight-in 30,000
Sales revenue 1,000,000
Sales returns 70,000
Purchase
discounts 12,000
(a) Compute the estimated
inventory at May 31, assuming that the gross profit is 30% of sales.
The estimated inventory at May 31 $
(b) Compute the estimated
inventory at May 31, assuming that the gross profit is 30% of cost.
(Round
percentage of sales to 2 decimal places, e.g. 78.74% and final answer to 0
decimal places, e.g. 6,225.)
The estimated inventory at May 31 $
E9-19 Presented below is information related to Ricky Henderson
Company.
Cost Retail
Beginning
inventory $ 200,000 $ 280,000
Purchases 1,375,000 2,140,000
Markups 95,000
Markup
cancellations 15,000
Markdowns 35,000
Markdown
cancellations 5,000
Sales revenue 2,200,000
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 $
E10-2 Martin Buber Co. purchased land as a factory site
for $400,000. The process of tearing down two old buildings on the site and
constructing the factory required 6 months.
The company paid $42,000 to raze the old buildings and sold
salvaged lumber and brick for $6,300. Legal fees of $1,850 were paid for
title investigation and drawing the purchase contract. Martin Buber paid
$2,200 to an engineering firm for a land survey, and $68,000 for
drawing the factory plans. The land survey had to be made before definitive
plans could be drawn. Title insurance on the property cost $1,500, and a
liability insurance premium paid during construction was $900. The contractor’s
charge for construction was $2,740,000. The company paid the contractor in two
installments: $1,200,000 at the end of 3 months and
$1,540,000 upon completion. Interest costs of $170,000 were incurred
to finance the construction.
Determine the cost of the land and the cost of the building as they
should be recorded on the books of Martin Buberk Co. Assume that the land
survey was for the building.
Cost of the Land $
Cost of the Building $
E10-23 Plant assets often require expenditures subsequent
to acquisition. It is important that they be accounted for properly. Any errors
will affect both the balance sheets and income statements for a number of
years.
For each of the following items, indicate whether the expenditure should
be capitalized or expensed in the period incurred.
Items
(a) Improvement.
(b) Replacement of a minor broken part on a machine.
(c) Expenditure that increases the useful life of an
existing asset.
(d) Expenditure that increases the efficiency and
effectiveness of a productive asset but does not increase its salvage value.
(e) Expenditure that increases the efficiency and
effectiveness of a productive asset and increases the asset’s salvage value.
(f) Expenditure that increases the quality of the
output of the productive asset.
(g) Improvement to a machine that increased its fair
market value and its production capacity by 30% without extending the machine’s
useful life.
(h) Ordinary repairs.
E10-24 On December 31, 2014, Travis Tritt Inc. has a
machine with a book value of $940,000. The original cost and related
accumulated depreciation at this date are as follows.
Machine $1,300,000
Less:
Accumulated depreciation 360,000
Book value $940,000
Depreciation is computed at $60,000 per year on a straight-line
basis.
Presented below is a set of independent situations. For each independent
situation, indicate the journal entry to be made to record the transaction.
Make sure that depreciation entries are made to update the book value of the
machine prior to its disposal.
A fire completely destroys the machine on August 31, 2015. An insurance
settlement of $430,000 was received for this casualty. Assume the
settlement was received immediately. (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
|
|
August 31,
2015
|
|||
|
(To record
current depreciation.)
|
|||
|
August 31,
2015
|
|||
|
(To record
loss of the machine.)
|
On April 1, 2015, Tritt sold the machine for $1,040,000 to Dwight
Yoakam Company. (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, 2015
|
|||
|
(To record
current depreciation.)
|
|||
|
April 1, 2015
|
|||
|
(To record
sale of the machine.)
|
|||
On July 31, 2015, the company donated this machine to the Mountain King
City Council. The fair value of the machine at the time of the donation was
estimated to be $1,100,000. (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
|
|
July 31, 2015
|
|||
|
(To record
current depreciation.)
|
|||
|
July 31, 2015
|
|||
|
(To record
donation of the machine.)
|
SOLUTION
PREVIEW
(a)
|
Depreciation
Expense (8/12 X $60,000)
|
40,000
|
|
|
Accumulated
Depreciation—Machinery
|
|
40,000
|
|
|
|
|
|
Loss on
Disposal of Machinery ($1,300,000 – $400,000) – $430,000
|
470,000
|
|
File name: WileyPlus WEEK2 Exercise Problems.doc File type: doc PRICE: $18
