Reference no: EM13580871
The inventory of Oheto Company on December 31, 2013, consists of the following items.
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Part No.
|
|
Quantity
|
|
Cost per Unit
|
|
Cost to Replace per Unit
|
| 110 |
|
|
700 |
|
$100 |
|
$105 |
| 111 |
|
|
1,070 |
|
63 |
|
55 |
| 112 |
|
|
580 |
|
84 |
|
80 |
| 113 |
|
|
250 |
|
179 |
|
189 |
| 120 |
|
|
450 |
|
215 |
|
218 |
| 121 |
a |
|
1,700 |
|
17 |
|
15 |
| 122 |
|
|
300 |
|
252 |
|
247 |
Part No. 121 is obsolete and has a realizable value of $0.5 each as scrap.
(a) Determine the inventory as of December 31, 2013, by the lower-of-cost-or-market method, applying this method directly to each item.
| Inventory as of December 31, 2013 |
|
$
|
(b) Determine the inventory by the lower-of-cost-or-market method, applying the method to the total of the inventory.
| Inventory as of December 31, 2013 |
|
$
|
| Inventory, May 1 |
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$ 160,900 |
| Purchases (gross) |
|
647,400 |
| Freight-in |
|
30,200 |
| Sales |
|
1,033,600 |
| Sales returns |
|
75,500 |
| Purchase discounts |
|
12,960 |
(a) Compute the estimated inventory at May 31, assuming that the gross profit is 25% of sales.
| The estimated inventory at May 31 |
|
$
|
(b) Compute the estimated inventory at May 31, assuming that the gross profit is 25% of cost.
| The estimated inventory at May 31 |
|
$
|
| Abstract company's fee for title search |
|
|
|
$546 |
| Architect's fees |
|
|
|
3,329 |
| Cash paid for land and dilapidated building thereon |
|
|
|
96,600 |
| Removal of old building |
|
$21,000
|
|
|
| Less: Salvage |
|
5,775
|
|
15,225 |
| Interest on short-term loans during construction |
|
|
|
7,770 |
| Excavation before construction for basement |
|
|
|
19,950 |
| Machinery purchased (subject to 2% cash discount, which was not taken) |
|
|
|
68,250 |
| Freight on machinery purchased |
|
|
|
1,407 |
| Storage charges on machinery, necessitated by noncompletion of |
|
|
|
|
| building when machinery was delivered |
|
|
|
2,289 |
| New building constructed (building construction took 6 months from |
|
|
|
|
| date of purchase of land and old building) |
|
|
|
509,250 |
| Assessment by city for drainage project |
|
|
|
1,680 |
| Hauling charges for delivery of machinery from storage to new building |
|
|
|
651 |
| Installation of machinery |
|
|
|
2,100 |
| Trees, shrubs, and other landscaping after completion of building |
|
|
|
|
| (permanent in nature) |
|
|
|
5,670 |
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.
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Land
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Buildings
|
|
Machinery and Equipment
|
|
Other
|
| Abstract company's fee for title search |
|
$
|
|
$
|
|
$
|
|
$
|
| Architect's fees |
|
|
|
|
|
|
|
|
| Cash paid for land and old building |
|
|
|
|
|
|
|
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| Removal of old building |
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|
|
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| Interest on short-term loans during construction |
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|
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| Excavation before construction for basement |
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|
|
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| Machinery purchased |
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|
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| Freight on machinery purchased |
|
|
|
|
|
|
|
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| Storage charges on machinery, necessitated by noncompletion of building when machinery was delivered |
|
|
|
|
|
|
|
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| New building constructed |
|
|
|
|
|
|
|
|
| Assessment by city for drainage project |
|
|
|
|
|
|
|
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| Hauling charges for delivery of machinery from storage to new building |
|
|
|
|
|
|
|
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| Installation of machinery |
|
|
|
|
|
|
|
|
| Trees, shrubs, and other landscaping after completion of building |
|
|
|
|
|
|
|
|
|
|
$
|
|
$
|
|
$
|
|
$
|
| (a) |
|
The City of Pebble Beach gives the company 5 acres of land as a plant site. The fair value of this land is determined to be $90,400. |
| (b) |
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14,000 shares of common stock with a par value of $53 per share are issued in exchange for land and buildings. The property has been appraised at a fair value of $904,000, of which $183,200 has been allocated to land and $720,800 to buildings. The stock of Impala Company is not listed on any exchange, but a block of 100 shares was sold by a stockholder 12 months ago at $68 per share, and a block of 200 shares was sold by another stockholder 18 months ago at $61 per share. |
| (c) |
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No entry has been made to remove from the accounts for Materials, Direct Labor, and Overhead the amounts properly chargeable to plant asset accounts for machinery constructed during the year. The following information is given relative to costs of the machinery constructed. |
| Materials used |
|
$13,310 |
| Factory supplies used |
|
920 |
| Direct labor incurred |
|
16,420 |
Additional overhead (over regular) caused by construction of
machinery, excluding factory supplies used |
|
2,790 |
| Fixed overhead rate applied to regular manufacturing operations |
|
60% of direct labor cost |
Cost of similar machinery if it had been purchased from
outside suppliers |
|
44,410 |
Prepare journal entries on the books of Impala Company to record these transactions. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)
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No.
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Account Titles and Explanation
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Debit
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Credit
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(a)
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(b)
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(c)
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PLEASE SHOW WORK
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