Reference no: EM13580871

The inventory of Oheto Company on December 31, 2013, consists of the following items.

Part No.			Quantity		Cost per Unit		Cost to Replace per Unit
110			700		$100		$105
111			1,070		63		55
112			580		84		80
113			250		179		189
120			450		215		218
121	a		1,700		17		15
122			300		252		247

Part No. 121 is obsolete and has a realizable value of $0.5 each as scrap.

(a) Determine the inventory as of December 31, 2013, by the lower-of-cost-or-market method, applying this method directly to each item.

Inventory as of December 31, 2013

$

 

(b) Determine the inventory by the lower-of-cost-or-market method, applying the method to the total of the inventory.

Inventory as of December 31, 2013

$

Inventory, May 1		$ 160,900
Purchases (gross)		647,400
Freight-in		30,200
Sales		1,033,600
Sales returns		75,500
Purchase discounts		12,960

(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

$

Abstract company's fee for title search				$546
Architect's fees				3,329
Cash paid for land and dilapidated building thereon				96,600
Removal of old building		$21,000
Less: Salvage		5,775		15,225
Interest on short-term loans during construction				7,770
Excavation before construction for basement				19,950
Machinery purchased (subject to 2% cash discount, which was not taken)				68,250
Freight on machinery purchased				1,407
Storage charges on machinery, necessitated by noncompletion of
building when machinery was delivered				2,289
New building constructed (building construction took 6 months from
date of purchase of land and old building)				509,250
Assessment by city for drainage project				1,680
Hauling charges for delivery of machinery from storage to new building				651
Installation of machinery				2,100
Trees, shrubs, and other landscaping after completion of building
(permanent in nature)				5,670

Determine the amounts that should be debited to Land, to Buildings, and to Machinery and Equipment. Assume the benefits of capitalizing interest during construction exceed the cost of implementation.

		Land		Buildings		Machinery and Equipment		Other
Abstract company's fee for title search		$		$		$		$
Architect's fees
Cash paid for land and old building
Removal of old building
Interest on short-term loans during construction
Excavation before construction for basement
Machinery purchased
Freight on machinery purchased
Storage charges on machinery, necessitated by noncompletion of building when machinery was delivered
New building constructed
Assessment by city for drainage project
Hauling charges for delivery of machinery from storage to new building
Installation of machinery
Trees, shrubs, and other landscaping after completion of building
		$		$		$		$

(a)		The City of Pebble Beach gives the company 5 acres of land as a plant site. The fair value of this land is determined to be $90,400.
(b)		14,000 shares of common stock with a par value of $53 per share are issued in exchange for land and buildings. The property has been appraised at a fair value of $904,000, of which $183,200 has been allocated to land and $720,800 to buildings. The stock of Impala Company is not listed on any exchange, but a block of 100 shares was sold by a stockholder 12 months ago at $68 per share, and a block of 200 shares was sold by another stockholder 18 months ago at $61 per share.
(c)		No entry has been made to remove from the accounts for Materials, Direct Labor, and Overhead the amounts properly chargeable to plant asset accounts for machinery constructed during the year. The following information is given relative to costs of the machinery constructed.

Materials used		$13,310
Factory supplies used		920
Direct labor incurred		16,420
Additional overhead (over regular) caused by construction of machinery, excluding factory supplies used		2,790
Fixed overhead rate applied to regular manufacturing operations		60% of direct labor cost
Cost of similar machinery if it had been purchased from outside suppliers		44,410

Prepare journal entries on the books of Impala Company to record these transactions. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

No.	Account Titles and Explanation	Debit	Credit
(a)
(b)
(c)
PLEASE SHOW WORK