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ch9_12_pe

# ch9_12_pe - Practice Exam Chapters 9-12 Problem I The...

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Practice Exam Chapters 9-12 Problem I The Scott-Dennis Company uses the dollar-value LIFO retail inventory method. The following information is available for 2006: Cost Retail Beginning inventory \$138,860 \$262,000 Net Purchases 239,000 413,020 Normal shortage 5,000 Net markups 12,000 Net markdowns 4,000 Net sales 390,000 Required: Compute estimated ending inventory and cost of goods sold for 2006. Assume that the company adopted the method at the beginning of 2006 and that the retail price index at the end of 2006 is 1.04.

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Problem II On January 2, 2006, the Seikely-Anderson Company signed a contract with Jones Construction to build a new building for a total contract price of \$1,200,000. The building will take one year to build and the following progress payments have been approved by both parties: Start of contract \$ 200,000 March 31, 2006 250,000 June 30, 2006 250,000 September 30, 2006 250,000 December 31, 2006 250,000 Total payments \$1,200,000 On January 2, 2006, Seikely-Anderson borrowed \$500,000 at 12% specifically for the project. The note was due in 18 months. The company had no other short-term debt but there were two long- term notes payable outstanding for the entire year: \$1,500,000 note with an interest rate of 10% and a \$2,500,000 note with an interest rate of 6%. Required: Calculate the amount of interest Seikely-Anderson should capitalize in 2006 assuming that the specific interest method is used.
Problem III The Grant-Horace Company purchased a new machine on April 1, 2006, for \$48,000. The machine is expected to have a life of five years and a residual value of \$3,000. The company's fiscal year ends on December 31. Required: 1. Determine the appropriate amount of depreciation for 2006 and 2007 applying each of the following methods: Year Straight-line SYD DDB 2006 2007 Computations:

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Problem IV On January 3, 2006, Hardaway Industries paid \$48 million for 6 million shares of Penny House, Inc. common. The investment represents a 30% interest in the net assets of Penny House and gave
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