*FOR NEO* - Need by Thursday evening (3/31) Intermediate Accounting Book: Intermediate Accounting 6th edition J. David Spiceland, James Sepe ISBN: 9780077395810
Multiple Choice: Choose A, B, C or D *Please show your work*
1) Chez XXXXX XXXXXy estimates the allowance for uncollectectible at 3% of the ending balance of accouns receivable. During 2011, Chez Fred's credit sales & collections were $125,000 & $131,000. What was the balance of accounts receivable on January 1, 2011, if $180 in accounts receivable were written off during 2011 & if the allowance account had a balance of $750 on 12/31/11?
d. none of the above
2) Nu Company reported the following pretax data for its first year of operations.
Net Sales 2,800
Cost of goods available for sale 2,500
Operating expense 880
Effective tax rate 40%
If LIFO is elected 820
If FIFO is elected 1,060
What is Nu's gross profit ratio if it elects LIFO?
3) Grab Manufacturing purchased a ten-ton draw press at a cost of $180,000 with terms of 5/15, n/45. Payment was made within the discount period. Shipping costs were $4,600, which included $200 for insurance in transit. Installation costs totaled $12,000 which included $4,000 for taking out a section of the wall & rebuilding it because the press was too large for the doorway. The capitalized cost of the ten ton draw press is:
4) On June 1, 2010, the Crocus Company began construction of a new manufacturing plant. The plant was completed on October 31, 2011. Expenditures on the project were (in millions):
July 1, 2010 - 54
Oct. 1, 2010 - 22
Feb. 1, 2011 - 30
April 1, 2011 - 21
Sept. 1, 2011 - 20
Oct. 1, 2011 - 6
On July 1, 2010, Crocus obtained a $70 million construction loan with 6% interate rate. The loan was outstanding through the end of October 2011. The company's only other interest bearing debt was a long-term note for $100 million with an interest rate of 8%. This note was outstanding during all 2010 & 2011 & the company's fiscal year end is December 31.
What is the amount of interest that Crocus should captialize in 2010 using the specific interest method?
a. 1.90 million
b. 1.95 million
c. 2.96 million
d. none of the above
5) On January 1, 2011, Nana Company paid $100,000 for 8,000 shares of Papa Company common stock. These securities were classified as trading securities. The ownership in Papa Company is 10%. Papa reported net income of $52,000 for the year ended 12/31/2011. The fair value of Papa stock on that date was $45 per share. What amount will be reported in the balance sheet of Nana Company for the investment in Papa at 12/31/2011?
6) Hobson Company bought the securities listed below during 2010. These securities were classified as trading securities. In its 12/31/2010 income statement, Hobson reported a ne unrealized loss of $13,000 on these securities. Pertinent data at the end of December 2011 are as follows:
Security Cost Fair Value
X $380,000 $352,000
Y 180,000 160,000
Z 420,000 414,000
What amount of loss on these securities sholud Hobson include in its income statement for the year ended December 31, 2011?