1. In applying the LCM rule, the inventory of surgical equipment would be valued at:
A) $230
B) $240
C) $170
D) $152
2. In applying the LCM rule, the inventory of surgical supplies would be valued at:
A) $115
B) $90
C) $80
D) $69
3. In applying the LCM rule, the inventory of rehab equipment would be valued at:
A) $315
B) $250
C) $213
D) $210
4. In applying the LCM rule, the inventory of rehab supplies would be valued at:
A) $122
B) $158
C) $162
D) $155
5. French Hens Manufacturing Co. purchased a ten-ton draw press at a cost of $180,000with terms of 5/15, n/45. Payment was made within the discount period. Shipping costswere $4,600, which included $200 for insurance in transit. Installation costs totaled $12,000, which included $4,000 for taking out a section of a wall and rebuilding it because the press was too large for the doorway. The capitalized cost of the ten-ton draw press is:
A) $171,000
B) $187,400
C) $187,600
D) $185,760
Use the following to answer questions 6 through 9:
On January 1, 2014, Grinch Inc. began construction of an automated cattle feeder system. The system was finished and ready for use on September 30, 2015. Expenditures on the project were as follows:
January 1, 2014 $200,000
September 1, 2014 $300,000
December 31, 2014 $300,000
March 31, 2015 $300,000
September 30, 2015 $200,000
Grinch borrowed $750,000 at 12% interest on January 1, 2014 to be used specifically for the construction of the asset. This loan was outstanding throughout the construction period. The company also had $4,500,000 in 9% bonds outstanding in 2014 and 2015. The company uses the specific interest method to capitalize interest, and their year ends on December 31st
6. Interest capitalized by Grinch Inc. for 2014 was:
A) $48,000
B) $42,000
C) $60,000
D) $36,000
7. Interest capitalized by Grinch Inc. for 2015 was:
A) $115,740
B) $86,805
C) $97,875
D) $67,500
8. Interest expense reported by Grinch Inc. on its 2014 income statement was:
A) $495,000
B) $459,000
C) $405,000
D) $ 90,000