28. For the month ended January 31, Ponzi Plastic Co. hadnet sales of $100,000,t

Question

28. For the month ended January 31, Ponzi Plastic Co. hadnet sales of $100,000,total goods available for sale of $70,000, and an estimated gross profit percentage of40%. Ponzi's estimated inventory at the end of January is. - b. C. $10,000 $30,000 $40,000 $60,000 d. 29. The fair market value ofLewis Company'snet identifiable assets is $5,000,000.Martin Corporation purchases Lewis' entire business for S5,800,000. Which ofthe following statements is not comect? a. Martin Corporationpaid $800,000 for goodwill generated by Lewis Company. b. Martin feels that Lewis Company has the ability to generate eamings in excess of a nomalretum on net identifiable assets. c. Martin will record amortization expense over a period notto exceed 40 years. d. Martin Corporation will record $800,000 to goodwill, anintangible asset, which will be reported in its balance sheet

Explanation / Answer

28) Estimated inventory at the end = Goods available for sale-Cost of goods sold

= 70000-(100000*60%)

Estimated inventory at the end = 10000

so answer is a) $10000

29) Goodwil = Purchase consideration-Net identifiable assets value

= 5800000-5000000

Goodwil = 800000

so answer is c) Martin will record amortization expense over a period not to exceed 40 years.

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