This question has been answered by sverma1 on Apr 9, 2013. View Solution
chazz posted a question Apr 07, 2013 at 2:01pm
Presented below is information related to Rembrandt Inc.’s inventory.





(per unit)



Skis



Boots



Parkas



Historical cost



$222



$124



$62



Selling price



248



170



86



Cost to distribute



22



9



3



Current replacement cost



238



123



60



Normal profit margin



37



34



25


Determine the following:

(a) the two limits to market value (i.e., the ceiling and the floor) that should be used in the lower-of-cost-or-market computation for skis.




Ceiling Limit



$



Floor Limit



$


(b) the cost amount that should be used in the lower-of-cost-or-market comparison of boots.




The cost amount



$


(c) the market amount that should be used to value parkas on the basis of the lower-of-cost-or-market.




The market amount



$


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Kumar Inc. uses a perpetual inventory system. At January 1, 2013, inventory was $221,420 at both cost and market value. At December 31, 2013, the inventory was $288,230 at cost and $255,780 at market value.

Prepare the necessary December 31 entry under (a) the cost-of-goods-sold method (b) Loss method. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)





No.


Account Titles and Explanation


Debit


Credit



(a)
























(b)





















Larsen Realty Corporation purchased a tract of unimproved land for $55,000. This land was improved and subdivided into building lots at an additional cost of $28,000. These building lots were all of the same size but owing to differences in location were offered for sale at different prices as follow.





Group



No. of Lots



Price per Lot



1


8


$4,050



2


18


5,400



3


19


2,700


Operating expenses for the year allocated to this project total $15,900. Lots unsold at the year-end were as follows.




Group 1


4 lots



Group 2


6 lots



Group 3


2 lots


At the end of the fiscal year Larsen Realty Corporation instructs you to arrive at the net income realized on this operation to date. (Round ratios for computational purposes to 1 decimal place, e.g 78.7% and final answers to 0 decimal places, e.g. $5,845.)




Net income



$











Exercise 9-12







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


$ 172,500



Purchases (gross)


659,000



Freight-in


31,400



Sales


1,071,900



Sales returns


80,300



Purchase discounts


12,820


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




The estimated inventory at May 31



$


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




The estimated inventory at May 31



$


answered the question Apr 09, 2013 at 4:31am
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PresentedbelowisinformationrelatedtoRembrandtInc.sinventory.

(perunit)

Skis

Boots

Parkas

Historicalcost

$222

$124

$62

Sellingprice

248

170

86

Costtodistribute

22

9

3...