1. Assuming that the periodic inventory method is used, compute the cost of goods sold and ending inventory under (1) LIFO and (2) FIFO.1. Sage Inc. purchased land at a price of $33,200. Closing costs were $2,620. An old building was removed at a cost of $12,080. What amount should be recorded as the cost of the land?
2. Oriole Company is constructing a building. Construction began on February 1 and was completed on December 31. Expenditures were $2,004,000 on March 1, $1,284,000 on June 1, and $3,039,450 on December 31. Compute Oriole's weighted-average accumulated expenditures for interest capitalization purposes.
3. Ivanhoe Company is constructing a building. Construction began on February 1 and was completed on December 31. Expenditures were $2,016,000 on March 1, $1,296,000 on June 1, and $3,041,650 on December 31.
Ivanhoe Company borrowed $1,115,400 on March 1 on a 5-year, 13% note to help finance construction of the building. In addition, the company had outstanding all year a 9%, 5-year, $2,469,300 note payable and an 10%, 4-year, $3,155,500 note payable. Compute the weighted-average interest rate used for interest capitalization purposes. (Round answer to 2 decimal places, e.g. 7.58%.)
4. Sheridan Inc. purchased land, building, and equipment from Laguna Corporation for a cash payment of $359,100. The estimated fair values of the assets are land $68,400, building $250,800, and equipment $91,200. At what amounts should each of the three assets be recorded? (Round intermediate percentage calculations to 5 decimal places e.g. 18.25124 and final answers to 0 decimal places, e.g. 5,275.)
a. land?
b. building?
c. equipment?
5. Swifty Company obtained land by issuing 2,470 shares of its $10 par value common stock. The land was recently appraised at $103,240. The common stock is actively traded at $40 per share.
Prepare the journal entry to record the acquisition of the land. (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.)
6. Cullumber Corporation traded a used truck (cost $23,200, accumulated depreciation $20,880) for a small computer with a fair value of $3,828. Cullumber also paid $580 in the transaction.
Prepare the journal entry to record the exchange. (The exchange has commercial substance.)
7. Ayayai Corporation traded a used truck (cost $20,000, accumulated depreciation $18,000) for a small computer worth $3,828. Ayayai also paid $580 in the transaction.
Prepare the journal entry to record the exchange, assuming the exchange lacks commercial substance.
8. Nash Company traded a used welding machine (cost $11,700, accumulated depreciation $3,900) for office equipment with an estimated fair value of $6,500. Nash also paid $3,900 cash in the transaction.
Prepare the journal entry to record the exchange. (The exchange has commercial substance.)
9. Sunland Company traded a used truck for a new truck. The used truck cost $31,200 and has accumulated depreciation of $28,080. The new truck is worth $38,480. Sunland also made a cash payment of $37,440.
Prepare Sunland's entry to record the exchange. (The exchange lacks commercial substance.)
10. Flint Corporation traded a used truck for a new truck. The used truck cost $24,200 and has accumulated depreciation of $20,570. The new truck is worth $42,350. Flint also made a cash payment of $39,930.
Prepare Flint's entry to record the exchange. (The exchange has commercial substance.)
11. Sheffield Corporation owns machinery that cost $23,200 when purchased on July 1, 2014. Depreciation has been recorded at a rate of $2,784 per year, resulting in a balance in accumulated depreciation of $9,744 at December 31, 2017. The machinery is sold on September 1, 2018, for $6,032.
Prepare journal entries to (a) update depreciation for 2018 and (b) record the sale. (Round answers to 0 decimal places, e.g. 5,275. 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.)
12. Skysong Company exchanged equipment used in its manufacturing operations plus $3,180 in cash for similar equipment used in the operations of Concord Company. The following information pertains to the exchange.
Skysong Co Equipment (cost):29,860. Accumulated depreciation: 20,140 Fair value of equipment: 13,250 Cash given up: 3,180
Concord Co. Equipment(cost): 29,680 Accumulated depreciation: 10,600 Fair value of equipment: 16,430
Prepare the journal entries to record the exchange on the books of both companies. Assume that the exchange lacks commercial substance.
Skysong Co.
Concord Co.
Prepare the journal entries to record the exchange on the books of both companies. Assume that the exchange has commercial substance.
Skysong Co.
Concord Co.
13. Crane Company purchased equipment on January 2, 2013, for $101,400. The equipment had an estimated useful life of 5 years with an estimated salvage value of $12,400. Crane uses straight-line depreciation on all assets. On January 2, 2017, Crane exchanged this equipment plus $10,800 in cash for newer equipment. The old equipment has a fair value of $52,400.
Prepare the journal entry to record the exchange on the books of Crane Company. Assume that the exchange has commercial substance.
14. Inventory information for Part 311 of Blue Corp. discloses the following information for the month of June.
| June 1 |
Balance |
302 units @ $15 |
June 10 |
Sold |
200 units @ $35 |
| 11 |
Purchased |
796 units @ $18 |
15 |
Sold |
499 units @ $37 |
| 20 |
Purchased |
501 units @ $19 |
27 |
Sold |
301 units @ $40
|
Assuming that the periodic inventory method is used, compute the cost of goods sold and ending inventory under (1) LIFO and (2) FIFO.
Assuming that the perpetual inventory method is used and costs are computed at the time of each withdrawal, what is the value of the ending inventory at LIFO?
Assuming that the perpetual inventory method is used and costs are computed at the time of each withdrawal, what is the gross profit if the inventory is valued at FIFO?