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# Presented below is information related to Rembrandt Inc.'s inventory.

This question was answered on Apr 09, 2013. View the Answer
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

\$

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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...

## This question was asked on Apr 07, 2013 and answered on Apr 09, 2013.

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