# E9-1 E9-12 E10-5 E10-12

Topics: Building, Construction, Building code Pages: 5 (756 words) Published: April 27, 2012
E9-1| |
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(Lower of Cost or Market) The inventory of Oheto Company on December 31, 2011, consists of the following items.  | Part No.| Quantity| Cost per Unit| Cost to Replace per Unit|
| 110|  | 600|  | \$95|  | \$100|  |
| 111|  | 1,000|  | 60|  | 52|  |
| 112|  | 500|  | 80|  | 76|  |
| 113|  | 200|  | 170|  | 180|  |
| 120|  | 400|  | 205|  | 208|  |
| a121|  | 1,600|  | 16|  | 14|  |
| 122|  | 300|  |  240|  | 235|  |
| a Part No. 121 is obsolete and has a realizable value of \$0.50 each as a scrap.| (a)| Determine the inventory as of December 31, 2011, by the lower of cost or market method, applying this method directly to each item.|  |

Inventory| \$|
(b)| Determine the inventory by the lower of cost or market method, applying the method to the total of the inventory.|  |
Inventory| \$|
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E9-12|
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| Correct.|
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(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| \$160,000|
| Purchases (gross)| 640,000|
| Freight-in| 30,000|
| Sales| 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 25% of sales. |  |
Inventory| \$|

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

E10-5|
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| Correct.|
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(Treatment of Various Costs)
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|  | \$ 520 |  | Architect's fees|  | 3,170|

| Cash paid for land and dilapidated building thereon|  | 92,000|  | Removal of old building| \$20,000|  |
|     Less: Salvage| ------------------------------------------------- 5,500| 14,500|
| Interest on short-term loans during construction|  | 7,400|  | Excavation before construction for basement|  | 19,000|  | Machinery purchased (subject to 2% cash discount, |  |  |  |     which was not taken)|  | 65,000|

| Freight on machinery purchased|  | 1,340|
| Storage charges on machinery, necessitated by |  |  |  |     noncompletion of building when machinery was |  | 2,180|  |     delivered|  |  |
| New building constructed (building construction took 6 |  |  |  |     months from date of purchase of land and old building)|  | 485,000|  | Assessment by city for drainage project|  | 1,600|  | Hauling charges for delivery of machinery from storage to |  |  |  |     new building|  | 620|

| Installation of machinery|  | 2,000|
| Trees, shrubs, and other landscaping after completion of |  |  |  |     building (permanent in nature)|  | 5,400|
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. (If answer is zero, please enter 0, do not leave any fields blank.)  | Land| Buildings| Machinery & Equipment| Other| Abstract fee | \$| \$| \$| \$|

Architect's fees| | | | |
Cash paid for land and old building | | | | |
Removal of old building| | | | |
Interest on loans during construction| | | | |
Excavation before construction| | | | |
Machinery purchased | | | | |
Freight on machinery| | | | |
Storage charges caused by noncompletion of building| | | | | New building | | | | |
Assessment by city | | | | |
Hauling charges - machinery | | | | |
Installation - machinery| | | | |
Landscaping|...