Intermediate Accounting Assignment - Notes Receivable, Inventories, PPE
Problem 1 - You are a manufacturer of turbines and are a publicly accountable entity. On December 31, 20x0, you made a sale of a turbine to a customer. You estimate that your customer's incremental borrowing rate is 6%. Your incremental borrowing rate is 5%.
Required -
For each of the following terms of payment, prepare the journal entries for this transaction for the years ended December 31, 20x0, 20x1 and 20x2.
a) The customer will pay $500,000 on December 31, 20x2 and will pay interest of 6% on the $500,000 on December 31, 20x1 and 20x2.
b) The customer will pay $500,000 on December 31, 20x2 and pay no interest in the interim.
c) The customer will pay $500,000 on December 31, 20x2 and will pay interest of 2% on the $500,000 on December 31, 20x1 and 20x2.
d) The customer will pay equal payments of principal and interest over 5 years with the first payment made on December 31, 20x1. The nominal value of the principal at December 31, 20x0 is $500,000. The interest charged is 3%.
e) The customer will pay $500,000 on December 31, 20x2 and pay no interest in the interim. The cash sales price of the turbine would be $450,000.
f) Repeat part (d) on the assumption that you are a private enterprise subject to ASPE and you wish to use the straight-line method.
Problem 2 -
Data on the one of the items of inventory of Tracce Corporation for the month of November is as follows:
|
Date
|
Items Purchased
|
Unit Cost
|
Total Purchase
|
Units Sold
|
Unit Price
|
Total Sale
|
|
Nov 1*
|
2,500
|
$3.56
|
$8,900
|
|
|
|
|
Nov 4
|
1,600
|
3.62
|
5,792
|
|
|
|
|
Nov 8
Nov 10
|
3,400
|
3.65
|
12,410
|
2,900
|
$6.65
|
$19,285
|
|
Nov 16
Nov 22
|
2,600
|
3.60
|
9,360
|
1,600
|
6.70
|
10,720
|
|
Nov 28
|
|
|
|
1,400
|
6.70
|
9,380
|
Required -
Calculate the value of the ending inventory, cost of goods sold and gross margin under each of the following assumptions:
a) FIFO - Periodic
b) Weighted Average - Periodic
c) Moving Weighted Average - Perpetual (use 4 decimals in the calculation of unit costs).