19. Sunand Corporation has two products in its ending inventory, each accounted
ID: 2576440 • Letter: 1
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19. Sunand Corporation has two products in its ending inventory, each accounted for at the lower of cost or market. A profie meroin of 30% on seling price is considered normal for each product. Speofic data with respect to each product followS $10 L2 Cost Replacement cost Estimated cost to desoose Estimated sellinq price In pricing its ending inventory using the lower-of-cost-or-market, what unit values should Sunland use for products #1 and #2. respectively? A. S11 and $14 B. S10 and $16 C. S9 and SIS D. $10 and $17 20. At a Amp-sum cost of $64,000, Ivanhoe Company recently purchesed the following items for 3000 1500 5000 $3.25 11.00 S.00 The appropriate cost per unit of inventory is A S3.25 S11,00 5.00 H. S4.06 S13.74 S6 24 C. S3.66 S12.37 S5.62 D. S6.74 674 6.74 21. The period of time during which interest must be capitalized ends when A. the asset is fully depreciated 8. the activities that are necessary to get the ascet ready for its intended use have begun C. the asset is substantially complete and ready for its intended use D. no further interest cost is being incurred. 22. Marigold Corp. is constructing a building. Construction began January 1, 2017 and the building was completed 12/31/17, Marigeld made payments to the construction company of $2,994,000 on 7/1, $5,216,000 on 9/1, and $5,910,00D en 12/31. Weighted-average accumulated expencitures were A. S3,569,000 B. S9,210,000 C S15,120,000 D. $3,044,000 23. Dicer uses the cost method to determine its ending inventory at cost. Assume the beginning nventory at cost was $260,0co and at retai was $39,000, purchases during the current year at cost were $1,370,000 and $2,200,000 at retail, freight-in on these purchases totaled $86,000, sales during the current year totaled $2,000,000, and net markups were s48,000 and net markdowns were $72,000, respectively. What is the ending inventory value at cost tto the neerest $1)? A. $371,228 B. $338,092 C. S381,638 D. $286,804 24, Waterway Industries traded in a manual pressing machine for an automated pressing machine and paid $40,500 cash. The old machine cost $466,000 and had accumulated depreciation of 135,000 up to that date and had a net book vale of $331,00O. The old machine had a fair value of 295,000 Which of the following is the correct journal entry to record the exchange assuming a lack of commercial substance? A. Cash 40.500 295,000 Equipment (new) Loss on Disposal Accum. Deprec. (old) 135,000 Equipment (new) B. Equipment (new) 335,500 Loss on Disposal Accum. Deprec, (old) 135,000 Equipment (new) Cash C. Equipment (ncw) 641,500Explanation / Answer
19) The correct option is D. Product 1 will be accounted at $10 and product 2 will be accounted at $17. As inventory is valued at lower of cost or net realizable value. Net realizable value is calculated by subtracting expected cost to dispose from expected selling Price.
Product 1 Lower of Net realizable Value ($20-$4 = $16) or Cost ($10) is $10
Product 2 Lower of Net realizable Value ($30-$5 = $25) or Cost ($17) is $17
20) The appropriate cost per unit of Inventory should be as per option B. M $4.06 N $13.74 O $6.24.
In this question total cost of all the product is $64,000, we can not calculate individual cost per unit of product accurately with any formula but from the options given in the question only option B and D's calculated cost is approximately $64,000. But according to the given resale value the option D's value of $6.74 per unit for each product do not seems appropriate thus the appropriate option should be Option B.
($4.06*3,000)+($13.74*1,500)+($6.24*5,000) = $63,990 (i.e. $64,000 approx.)
21) The correct option is C. The period of time during which interest must capitalized ends when the asset is substantially complete and ready for its intended use.
22) The correct option is C. The total expenditure for Building till december 31 is weighted average accumulated expenditure which is $15,120,000 ($2,994,000+$6,216,000+$5,910,000)
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