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# \$15.00P8-10 (Internal Indexes—Dollar-Value LI

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• Due on Jun. 19, 2012
• Asked on Jun 18, 2012 at 7:17:15PM

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P8-10 (Internal Indexes—Dollar-Value LIFO)

Presented below is information related to Kaisson Corporation for the last 3 years. Base-Year Cost Current-Year Cost Item Quantities in Ending Inventories Unit Cost Amount Unit Cost Amount December 31, 2009 A 9,000 \$2.00 \$18,000 \$2.20 \$19,800 B 6,000 3.00 18,000 3.55 21,300 C 4,000 5.00 20,000 5.40 21,600 Totals \$56,000 \$62,700 December 31, 2010 A 9,000 \$2.00 \$18,000 \$2.60 \$23,400 B 6,800 3.00 20,400 3.75 25,500 C 6,000 5.00 30,000 6.40 38,400 Totals \$68,400 \$87,300 December 31, 2011 A 8,000 \$2.00 \$16,000 \$2.70 \$21,600 B 8,000 3.00 24,000 4.00 32,000 C 6,000 5.00 30,000 6.20 37,200 Totals \$70,000 \$90,800

Instructions

Compute the ending inventories under the dollar-value LIFO method for 2009, 2010, and 2011. The base period is January 1, 2009, and the beginning inventory cost at that date was \$45,000. Compute indexes to two decimal places.

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 121a 1,600 16 14 122 300 240 235 Instructions

(a) Determine the inventory as of December 31, 2011, by the lower-of-cost-or-market method, applying this method directly to each item.

(b) Determine the inventory by the lower-of-cost-or-market method, applying the method to the total of the 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

Instructions

(a) Compute the estimated inventory at May 31, assuming that the gross profit is 25% of sales.

(b) Compute the estimated inventory at May 31, assuming that the gross profit is 25% of cost.

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 delivered 2,180 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

Instructions

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. Indicate how any costs not debited to these accounts should be recorded.

E10-12 (Entries for Asset Acquisition, Including Self-Construction)

Below are transactions related to Impala Company.

(a) The City of Pebble Beach gives the company 5 acres of land as a plant site. The market value of this land is determined to be \$81,000.

(b) 14,000 shares of common stock with a par value of \$50 per share are issued in exchange for land and buildings. The property has been appraised at a fair market value of \$810,000, of which \$180,000 has been allocated to land and \$630,000 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 \$65 per share, and a block of 200 shares was sold by another stockholder 18 months ago at \$58 per share.

(c) 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 \$12,500 Factory supplies used 900 Direct labor incurred 16,000 Additional overhead (over regular) caused by construction of machinery, excluding factory supplies used 2,700 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 44,000

Instructions

Prepare journal entries on the books of Impala Company to record these transactions.

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E10-5 AND E10-2 SOLUTION ALONE IN EXCEL
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