Reference no: EM131291992
Choculator’s preliminary 2014 net income was $5,400,000 without considering items a.-f. below. Determine the correct 2014 net income by adjusting this amount on the next page for the appropriate amounts from items a-f.
a. On October 1, 2014, Choculator sold merchandise to CPAsRUs and received an 8-month noninterest-bearing $300,000 note in payment. An appropriate discount rate was 12%.
b. On December 27, 2014, Choculator received payment for merchandise sold on account for $600,000, terms 2/10, net 30. The customer paid within the discount period. Choculator used the gross method for recording sales discounts.
c. On December 31, 2014, the balance in accounts receivable was $1,200,000. On this date, Choculator issued a 12%, $1,000,000 short-term note to First Bank and assigned accounts receivable of $1,200,000 as collateral. First Bank charged a fee of 3% of the assigned receivables.
d. On December 31, 2014, Choculator recorded the COGS entry using the average cost method. The company sold 1,500,000 units in 2014, reflecting a disappointing drop in demand for milk chocolate products as U.S. consumers switched to dark chocolate for its many health benefits.
Inventory at December 31, 2013 (800,000 units) $4,600,000
2014 purchases (800,000 units) 1,000,000
$5,600,000
e. Assume that before the end of 2014, the FASB changed the definition of market value to be net realizable value for the lower-of-cost-or-market rule.
On December 31, 2014, Choculator applied the LCM rule to ending inventory and recorded the inventory writedown, if necessary. Any writedown is recorded as a separate loss. The selling price and disposal costs of ending inventory were estimated to be $330,000 and $30,000, respectively.
f. On December 31, 2014, Choculator recorded the necessary adjusting entries, if any, for items a. – c. above.
Calculate depreciation expense of the equipment
: Super Saver Groceries purchased store equipment for $25,000. Super Saver estimates that at the end of its 10-year service life, the equipment will be worth $4,000. During the 10-year period, the company expects to use the equipment for a total of 10,..
|
Using straight-line depreciation
: Bricker Enterprises purchased a machine for $204,000 on October 1, 2018. The estimated service life is ten years with a $19,500 residual value. Bricker records partial-year depreciation based on the number of months in service. Depreciation expense f..
|
Identify each of the expenditures as chargeable
: Identify each of the following expenditures as chargeable. Land Land Improvements, Buildings, Machinery and Equipment, other account. Cost of paving parking area for employees and customers. Insurance during construction of building. Interest incurre..
|
Depreciation methods-straight-line-double-declining balance
: Hawaiian Specialty Foods purchased equipment for $26,000. Residual value at the end of an estimated four-year service life is expected to be $2,600. Calculate depreciation expense for the first year using each of the following depreciation methods: (..
|
Definition of market value to be net realizable value
: Choculator’s preliminary 2014 net income was $5,400,000 without considering items a.-f. below. On October 1, 2014, Choculator sold merchandise to CPAsRUs and received an 8-month noninterest-bearing $300,000 note in payment. An appropriate discount r..
|
The temperature was affetcing the production rate
: A six sigma project was done and it was found that the temperature was affetcing the production rate. The initial project measured the production rate trend to identify the potential reasons of concern. If you has to decide which parameter you need t..
|
The economic order quantity of hte product
: The Economic order quantity of hte product you are purchasing is 20,350 units. THe supplier runs 40,000 units per lot. He wants you to buy all of them since you are the only buyer of ths product.
|
What are the constraints equations
: The Waikiki enterprise corp. produces 2 types of computers at its manufacturing plant in CA. Profit on computer A is $900 per unit and for computer B it is $600. The manufacturing plant can produce not more than 50 of computer A and 100 of computer B..
|
What is the amortization expense for the year ended
: Berry Co. purchases a patent on January 1, 2018, for $37,000 and the patent has an expected useful life of five years with no residual value. Assuming Berry Co. uses the straight-line method, what is the amortization expense for the year ended Decemb..
|