1. During the prior fiscal year, Jeremiah Corp. signed a long term f raw materia
ID: 2600679 • Letter: 1
Question
1. During the prior fiscal year, Jeremiah Corp. signed a long term f raw materials·Jeremiah commitment with its primary supplier to purchase paid the $2.0 million to acquire the raw materials when the raw $1.6 million. Assume that the purchase journal entry to record the purchase? raw materials were only worth commitment was properly recorded. What is the a. Debit Inventory for $1,600,000, and credit Cash for $1,600,000. b. Debit Inventory for $1,600,000, debit Unrealized Holding Gain or Loss for $400,000 and credit Cash for $2,000,000 Debit Inventory for $1,600,000, debit Estimated for $400,000 and credit Cash for $2,000,000 Liability on Purchase Commitments c. d. Debit Inventory for $2,000,000, and credit Cash for $2,000,000. e. None of the above. Ryan Distribution Co. has determined its December 31, 2017 inventory on a FIFO basis at 2. g to that inventory follows: $1,020,000 Estimated selling price Estimated cost of disposal Normal profit margin Current replacement cost 120,000 800,000 Ryan records losses that result from applying the lower-of-cost-or-market rule. At December 31, 2017, the loss that Ryan should recognize is a. $O b. $60,000. c. $70,000. d. $80,000. e. None of the above. 3. On December 1, 2017, Hogan Co. purchased a tract of land as a factory site for $780,000. The old building on the property was razed, and salvaged materials resulting from demolition were sold. Additional costs incurred and salvage proceeds realized during December 2017 were as follows: Cost to raze old building Legal fees for purchase contract and to record ownership Title guarantee insurance $70,000 10,000 16,000 8,000 Proceeds from sale of salvaged materials In Hogan's December 31, 2017 balance sheet, what amount should be reported as land? a. $806,000 b. $842,000. c. $868,000 d. $876,000.Explanation / Answer
Solution:-
1. Debit Inventory for $1,600,000, debit Estimated Liability on Purchase Commitmentsfor $400,000 and credit Cash for $2,000,000.
2. d. $ 80,000
Explanation:-
RC = 800,000
NRV (Celling) = (1,020,000 - 20,000) = $ 1,000,000
NRV - Normal profit = (Floor) = 1,000,000 - 120,000 = 880,000
Then, market = 800,000 (RC) , Cost = 880,000, LCM = Market
Loss = 800,000 - 880,000 = $ 80,000
3. c. $868,000
Explanation:-
$780,000 + $70,000 + $10,000 + $16,000 – $8,000 = $868,000.
Please Rate or comment if you have any doubt regarding this solution.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.