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E9-1 (Lower of Cost or Market) The inventory of Oheto

Resolved Question:

E9-1

(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a Part No. 121 is obsolete and has a realizable value of $0.50 each as a scrap.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 $








E9-12

(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

(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

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Submitted: 2 years ago.
Category: Multiple Problems
Expert:  KellyV2012 replied 2 years ago.

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KellyV2012, Bachelor's Degree
Satisfied Customers: 308
Experience: BS in Business Administration: Options in Accounting & Finance
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