1.Skysong Company follows the practice of pricing its inventory at LCNRV, on an individual-item basis.

From the information above, determine the amount of Skysong Company inventory.

2. Sarasota Company follows the practice of pricing its inventory at the lower-of-cost-or-market, on an individual-item basis.

From the information above, determine the amount of Sarasota Company inventory.

3. Metlock Realty Corporation purchased a tract of unimproved land for $52,000. This land was improved and subdivided into building lots at an additional cost of $27,000. These building lots were all of the same size but owing to differences in location were offered for sale at different prices as follows.

Operating expenses for the year allocated to this project total $16,000. Lots unsold at the year-end were as follows.

At the end of the fiscal year Metlock Realty Corporation instructs you to arrive at the net income realized on this operation to date.  

4. Newman Legler requires an estimate of the cost of goods lost by fire on March 9. Merchandise on hand on January 1 was $34,600. Purchases since January 1 were $71,200; freight-in, $3,600; purchase returns and allowances, $2,700. Sales are made at 33 1/3% above cost and totaled $105,300 to March 9. Goods costing $11,400 were left undamaged by the fire; remaining goods were destroyed.

Compute the cost of goods destroyed.  (Round gross profit percentage and final answer to 0 decimal places, e.g. 15% or 125.)

Compute the cost of goods destroyed, assuming that the gross profit is 33 1/3% of sales.  (Round ratios for computational purposes to 5 decimal places, e.g. 78.72345% and final answer to 0 decimal places, e.g. 28,987.)

5. Presented below is information related to Splish Company.

Compute the inventory by the conventional retail inventory method.  (Round ratios for computational purposes to 0 decimal places, e.g. 78% and final answer to 0 decimal places, e.g. 28,987.)

6. Bonita Company determined its ending inventory at cost and at LCNRV at December 31, 2017, December 31, 2018, and December 31, 2019, as shown below.

Prepare the journal entries required at December 31, 2018, and at December 31, 2019, assuming that a perpetual inventory system and the cost-of-goods-sold method of adjusting to LCNRV is used.  (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.)

Date	Account Titles and Explanation	Debit	Credit
12/31/18
12/31/19

7. Cheyenne Company lost most of its inventory in a fire in December just before the year-end physical inventory was taken. Corporate records disclose the following.

Merchandise with a selling price of $29,700 remained undamaged after the fire, and damaged merchandise has a net realizable value of $8,100. The company does not carry fire insurance on its inventory. Compute the amount of inventory fire loss. (Do not use the retail inventory method.)

8. Bridgeport Specialty Company, a division of Lost World Inc., manufactures three models of gear shift components for bicycles that are sold to bicycle manufacturers, retailers, and catalog outlets. Since beginning operations in 1993, Bridgeport has used normal absorption costing and has assumed a first-in, first-out cost flow in its perpetual inventory system. The balances of the inventory accounts at the end of Bridgeport’s fiscal year, November 30, 2017, are shown below. The inventories are stated at cost before any year-end adjustments.

The following information relates to Bridgeport’s inventory and operations. 1. The finished goods inventory consists of the items analyzed below.

(a) Prepare the inventory section of Bridgeport’s balance sheet as of November 30, 2018.  (Round answers to 0 decimal places, e.g. 2,556.)

Bridgeport Specialty Company Balance Sheet November 30, 2018
			$
					$

9. Martinez Corporation operates a retail computer store. To improve delivery services to customers, the company purchases four new trucks on April 1, 2017. The terms of acquisition for each truck are described below.

Prepare the appropriate journal entries for the above transactions for Martinez Corporation.  (Round present value factors to 5 decimal places, e.g. 0.52587 and final 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.)

No.	Account Titles and Explanation	Debit	Credit
1.
2.
3.
4.

10. Plant acquisitions for selected companies are as follows. 1. Ayayai Industries Inc. acquired land, buildings, and equipment from a bankrupt company, Torres Co., for a lump-sum price of $924,000. At the time of purchase, Torres’s assets had the following book and appraisal values.

To be conservative, the company decided to take the lower of the two values for each asset acquired. The following entry was made.

2. Pina Enterprises purchased store equipment by making a $2,640 cash down payment and signing a 1-year, $30,360, 10% note payable. The purchase was recorded as follows.

3. Grouper Company purchased office equipment for $19,400, terms 2/10, n/30. Because the company intended to take the discount, it made no entry until it paid for the acquisition. The entry was:

4. Monty Inc. recently received at zero cost land from the Village of Cardassia as an inducement to locate its business in the Village. The appraised value of the land is $35,640. The company made no entry to record the land because it had no cost basis. 5. Flounder Company built a warehouse for $792,000. It could have purchased the building for $976,800. The controller made the following entry.

Prepare the entry that should have been made at the date of each acquisition.  (Round intermediate calculations to 5 decimal palces, e.g. 0.56487 and final 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.)

No.	Account Titles and Explanation	Debit	Credit
1.
2.
3.
4.
5.

11. The following three situations involve the capitalization of interest. Situation I On January 1, 2017, Coronado, Inc. signed a fixed-price contract to have Builder Associates construct a major plant facility at a cost of $4,443,000. It was estimated that it would take 3 years to complete the project. Also on January 1, 2017, to finance the construction cost, Coronado borrowed $4,443,000 payable in 10 annual installments of $444,300, plus interest at the rate of 10%. During 2017, Coronado made deposit and progress payments totaling $1,666,125 under the contract; the weighted-average amount of accumulated expenditures was $888,600 for the year. The excess borrowed funds were invested in short-term securities, from which Coronado realized investment income of $270,600. What amount should Coronado report as capitalized interest at December 31, 2017?

Situation II During 2017, Whispering Corporation constructed and manufactured certain assets and incurred the following interest costs in connection with those activities.

All of these assets required an extended period of time for completion. Assuming the effect of interest capitalization is material, what is the total amount of interest costs to be capitalized?

Situation III Metlock, Inc. has a fiscal year ending April 30. On May 1, 2017, Metlock borrowed $9,658,000 at 11% to finance construction of its own building. Repayments of the loan are to commence the month following completion of the building. During the year ended April 30, 2018, expenditures for the partially completed structure totaled $6,760,600. These expenditures were incurred evenly throughout the year. Interest earned on the unexpended portion of the loan amounted to $627,770 for the year. How much should be shown as capitalized interest on Metlock’s financial statements at April 30, 2018?

12.

Larkspur Corporation purchased a computer on December 31, 2016, for $111,300, paying $31,800 down and agreeing to pay the balance in five equal installments of $15,900 payable each December 31 beginning in 2017. An assumed interest rate of 9% is implicit in the purchase price.

Prepare the journal entry at the date of purchase.  (Round factor values to 5 decimal places, e.g. 1.25124 and final 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.) Date Account Titles and Explanation Debit Credit December 31, 2016

Prepare the journal entry at December 31, 2017, to record the payment and interest (effective-interest method employed).  (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.) Date Account Titles and Explanation Debit Credit December 31, 2017

Prepare the journal entry at December 31, 2018, to record the payment and interest (effective-interest method employed).  (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.) Date Account Titles and Explanation Debit Credit December 31, 2018

13. Crane Corporation, which manufactures shoes, hired a recent college graduate to work in its accounting department. On the first day of work, the accountant was assigned to total a batch of invoices with the use of an adding machine. Before long, the accountant, who had never before seen such a machine, managed to break the machine. Crane Corporation gave the machine plus $476 to Cheyenne Business Machine Company (dealer) in exchange for a new machine. Assume the following information about the machines.

For each company, prepare the necessary journal entry to record the exchange. (The exchange has commercial substance.)  (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.)

Account Titles and Explanation	Debit	Credit
Crane Corporation
Cheyenne Business Machine Company

14. On April 1, 2017, Oriole Company received a condemnation award of $541,800 cash as compensation for the forced sale of the company’s land and building, which stood in the path of a new state highway. The land and building cost $75,600 and $352,800, respectively, when they were acquired. At April 1, 2017, the accumulated depreciation relating to the building amounted to $201,600. On August 1, 2017, Oriole purchased a piece of replacement property for cash. The new land cost $113,400, and the new building cost $504,000. Prepare the journal entries to record the transactions on April 1 and August 1, 2017.  (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.)

Date	Account Titles and Explanation	Debit	Credit
April 1
Aug. 1

15.

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