Question

1,050,000 2,100,000 66 6796 Net purchases Net sales Percentage markup on cost A fire destroyed Barton's October 31 inventory, leaving undamaged inventory with a cost of $21,000. Using the gross profit method, the estimated ending inventory destroyed by fire is a. $119,000 b. $539,000. c. $560,000. d. $700,000. 15. Dicer uses the conventional retail method (the preferred approach) to determine its ending inventory at cost. Assume the beginning inventory at cost (retail) were $390,000 ($594,000), purchases during the current year at cost (retail) were $2,055,000 ($3,300,000), freight-in on these purchases totaled $129,000, sales during the current year totaled $3,000,000, and net markups (markdowns) were $72,000 ($108,000). What is the ending inventory value at cost? a, $556,842. b. $567,138 c. $580,206. d. $858,000 The cost of land does not include 16. a. costs of grading, filling, draining, and clearing b. costs of removing old buildings. c. costs of improvements with limited lives. d. special assessments. Please explain Why? When funds are borrowed to pay for construction of assets that qualify for capitalization of interest, the excess funds not needed to pay for construction may be temporarily invested in interest-bearing securities. Interest earned on these temporary investments should be a. offset against interest cost incurred during construction. b. used to reduce the cost of assets being constructed c, multiplied by an appropriate interest rate to determine the amount of interest to be capitalized d. 17. recognized as revenue of the period. Wilson Co. purchased land as a factory site for $1,350,000. Wilson paid $120,000 to tear down two buildings on the land. Salvage was sold for $8,100. Legal fees of $5,220 were paid for title investigation and making the purchase. Architect's fees were $46,800. Title insurance cost $3,600, and liability insurance during construction cost $3,900. Excavation cost $15,660. The contractor was paid $4,200,000. An assessment made by the city for pavement was $9,600. Interest costs during construction were $255,000. 18. The cost of the land that should be recorded by Wilson Co. is a. $1,470,720. b. $1,480,320.

Answer 1

And-15

Cost Retail 2 Beginning inventory 390000 594000 3 Purchases 2055000 3300000 4 Freight-in 129000 5 Merchandise available for sale 2574000 3894000 6 Add: Markups 7 Totals 72000 2574000 3966000 8 Cost to retail ratio (2574000/3858000) 64.90% 9 Deduct: Markdowns -108000 10 Deduct net sales 3000000 11 Ending inventory at retail 858000

Ending inventory at retail = $858,000

And,

Cost o retail ratio = 64.90%

Therefore,

Ending inventory at cost = $858,000 x 64.90% = $556,842

Hence, the correct option is a.

16- the correct option is-c. costs of improvements with limited lives.

17-the correct option is-d. recognized as revenue of the period.

18-hence,the correct option is-b

Cost of Land: Calculate the cost of land as shown below: LAND Details Amount Purchase value $1,350,000 Cost incurred to tear down two buildings 120,000 S 5,220 Legal fees Title insurance cost $3.600 Assessment cost $ 9.600 Total value $1,488,420 $ 8,100 Less: Value of salvage sold Total cost of Land $1,480,320 Thus, the cost of land that should be recorded by W Co. is $1,480,320