1. On July 1, 2009, ABC Inc. purchased land and incurred other costs relative to the construction of a new warehouse. A summary of economic activities is listed below:

Required:

Determine the balance in the appropriate PP&E accounts. Apply the interest on the construction

loan to the cost of the building only.

2. DEF, Inc. purchased new equipment for $465,000, terms f.o.b. shipping point. Other costs connected with

the purchase were as follows:

Determine the capitalized cost of the equipment.

3. UMUC Inc. applies lower-of-cost-or-market valuation to individual products and has collected the

following data: Determine the balance sheet inventory carrying value for Products A, B, and C.

4.Bowie Inc. uses the conventional retail inventory method. Expressed in millions of dollars, information

about Bowie's 2012 inventory account is expressed in the table below: At what amount would Bowie record its inventory on its year-end 12/31/12 balance sheet? 5. On January 1, 2009, the XYZ Company adopted the dollar-value LIFO method of computing inventory.

An internal cost index is used to convert ending inventory to base year. Inventory on January 1 was

$200,000. Year-end inventories at year-end costs and cost indexes for its one inventory pool were as

follows: Compute inventory amounts at the end of each year.

Transcribed Image Text:

Purchase price Title insurance Legal fees to purchase land Cost of razing old building on lot Proceeds from sale of salvageable materials Property taxes, January 1, 2009 - June 30, 2009 Cost of grading and filling building site Cost of building construction Interest on construction loan Cost of constructing driveway Cost of parking lot and fencing $185,000 $1,500 $1,000 8,500 (1,200) 3,000 9,000 620,000 12,000 8,000 12,000 State sales tax Freight costs Insurance while in transit Insurance after equipment placed in service Installation costs Insurance for the first year of operations Testing 29,200 5,600 800 1,200 2,000 2,400 700 Selling price Cost Replacement cost Disposal cost Normal profit margin Product A Product B Product C $45 $60 35 40 30 33 10 30% $30 21 20 11 10% 8 20% Beginning inventory Purchases Freight-in Purchase returns Net markups Net markdowns Normal spoilage Net sales Cost 55 1,160 30 45 Retail 90 2,170 115 255 100 60 1,940 Year Ended December 31 2009 2010 2011 Inventory at Year-end Costs $259,200 296,800 299,000 Cost Index (Relative to Base Year) 1.08 1.12 1.15 Purchase price Title insurance Legal fees to purchase land Cost of razing old building on lot Proceeds from sale of salvageable materials Property taxes, January 1, 2009 - June 30, 2009 Cost of grading and filling building site Cost of building construction Interest on construction loan Cost of constructing driveway Cost of parking lot and fencing $185,000 $1,500 $1,000 8,500 (1,200) 3,000 9,000 620,000 12,000 8,000 12,000 State sales tax Freight costs Insurance while in transit Insurance after equipment placed in service Installation costs Insurance for the first year of operations Testing 29,200 5,600 800 1,200 2,000 2,400 700 Selling price Cost Replacement cost Disposal cost Normal profit margin Product A Product B Product C $45 $60 35 40 30 33 10 30% $30 21 20 11 10% 8 20% Beginning inventory Purchases Freight-in Purchase returns Net markups Net markdowns Normal spoilage Net sales Cost 55 1,160 30 45 Retail 90 2,170 115 255 100 60 1,940 Year Ended December 31 2009 2010 2011 Inventory at Year-end Costs $259,200 296,800 299,000 Cost Index (Relative to Base Year) 1.08 1.12 1.15

Answer rating: 100% (QA)

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