2024 – Question 1 Kraft Enterprises owns the following assets at December 31 2012

                                    1,000                                                   $15,600

Compute the April 30 inventory and the April cost of goods sold using the FIFO method.  

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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)            768                  $8.00

Purchases:

January 5, 2012                                               1,536               9.00

January 25, 2012                                             1,664               10.00

February 16, 2012                                           1,024               11.00

March 26, 2012                                                  768               12.00

A physical inventory on March 31, 2012, shows 2,048 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.  

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Question 7  

Floyd Corporation has the following four items in its ending inventory

Item                 Cost     Replacement Cost       (NRV)             NRV- Normal Profit Marging

Jokers              $2,236             $2,292             $2,348             $1,789

Penguins          5,590               5,702               5,534               4,584

Riddlers          4,919               5,087               4,282               4,137

Scarecrows      3,578               3,343               4,282               3,432

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Question 8

Kumar Inc. uses a perpetual inventory system. At January 1, 2013, inventory was $241,606 at both cost and market value. At December 31, 2013, the inventory was $322,894 at cost and $303,701 at market value. Prepare the necessary December 31 entry under:

(a)	the cost of goods sold method

(b)  the loss method

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Question 9

Boyne Inc. had beginning inventory of $15,000 at cost and $25,000 at retail. Net purchases were $150,000 at cost and $212,500 at retail. Net markups were $12,500; net markdowns were $8,750; and sales were $196,250. 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.

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Question 10

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                     $184,000

Purchases (gross)                     736, 000

Freight-in                                34, 500

Sales                                        1,150,000

Sales returns                            80,500

Purchase discounts                  13,800

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

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

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Question 11  

Previn Brothers Inc. purchased land at a price of $27,400. Closing costs were $2,550. An old building was removed at a cost of $10,530. What amount should be recorded as the cost of the land?  

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Question 12  

Garcia Corporation purchased a truck by issuing an $90,400, 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.

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Question 13  

Mohave Inc. purchased land, building, and equipment from Laguna Corporation for a cash payment of $431,550. The estimated fair values of the assets are land $82,200, building $301,400, and equipment $109,600. At what amounts should each of the three assets be recorded? (Note: Do not round the computation of the % of total.

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Question 14  

Fielder Company obtained land by issuing 2,000 shares of its $11 par value common stock. The land was recently appraised at $91,800. The common stock is actively traded at $44 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.

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Question 15  

Navajo Corporation traded a used truck (cost $22,600, accumulated depreciation $20,340) for a small computer worth $4,181. Navajo also paid $1,130 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.

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Question 16  

Mehta Company traded a used welding machine (cost $12,330, accumulated depreciation $4,110) for office equipment with an estimated fair value of $6,850. Mehta also paid $4,110 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.

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Question 17  

Depreciation is normally computed on the basis of the nearest 

a). Full month and to the nearest cent. 

b). Full month and to the nearest dollar 

c). Day and to the nearest cent. 

d). Day and to the nearest dollar 

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Question 18  

Fernandez Corporation purchased a truck at the beginning of 2012 for $43,260. The truck is estimated to have a salvage value of $2,060 and a useful life of 164,800 miles. It was driven 23,690 miles in 2012 and 31,930 miles in 2013. Compute depreciation expense for 2012 and 2013.(Round answers to 0 decimal places, i.

e. 2,250.

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Question 19  

Lockhard Company purchased machinery on January 1, 2012, for $77,400. The machinery is estimated to have a salvage value of $7,740 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.) 

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Question 20  

Jurassic Company owns machinery that cost $955,800 and has accumulated depreciation of $382,320. The expected future net cash flows from the use of the asset are expected to be $531,000. The fair value of the equipment is $424,800. Prepare the journal entry, if any, to record the impairment loss.

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Question 21  

Everly Corporation acquires a coal mine at a cost of $496,800. Intangible development costs total $124,200. After extraction has occurred, Everly must restore the property (estimated fair value of the obligation is $99,360), after which it can be sold for $198,720. Everly estimates that 4,968 tons of coal can be extracted.

If 869 tons are extracted the first year, prepare the journal entry to record depletion.

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Question 22  

Francis Corporation purchased an asset at a cost of $42,800 on March 1, 2012. The asset has a useful life of 8 years and a salvage value of $4,280. For tax purposes, the MACRS class life is 5 years. Compute tax depreciation for each year 2012–2017. (Round answers to 0 decimal places.) 

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Question 23  

Celine Dion Corporation purchases a patent from Salmon Company on January 1, 2012, for $54,600. 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.

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Question 24  

Karen Austin Corporation has capitalized software costs of $757,100, and sales of this product the first year totaled $400,710. Karen Austin anticipates earning $934,990 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. 

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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.

a). Disclosure in note form only 

b). recognition of a loss and creation of a liability for the value of the land 

c). recognition of a loss only 

d). creation of a liability only 

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Question 26  

Roley Corporation uses a periodic inventory system and the gross method of accounting for purchase discounts. On July 1, Roley purchased $73,000 of inventory, terms 2/10, n/30, FOB shipping point. Roley paid freight costs of $1,300. On July 3, Roley returned damaged goods and received credit of $7,300.

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.

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Question 27  

Takemoto Corporation borrowed $105,600 on November 1, 2012, by signing a $107,976, 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.

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Question 28  

Whiteside Corporation issues $584,000 of 9% bonds, due in 15 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.

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Question 29  

Indiana Jones Company enters into a 6-year lease of equipment on January 1, 2012, which requires 6 annual payments of $36,920 each, beginning January 1, 2012. In addition, the lessee guarantees a residual value of $20,720 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 $180,505.

Prepare Lost Ark’s January 1, 2012, journal entries.

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Question 30  

On January 1, 2012, Irwin Animation sold a truck to Peete Finance for $25,250 and immediately leased it back. The truck was carried on Irwin’s books at $20,000. The term of the lease is 5 years, and title transfers to Irwin at lease-end. The lease requires five equal rental payments of $6,832 at the end of each year. The appropriate rate of interest is 11%, 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.)

 

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