Question 1
Sedato Company follows the practice of pricing its inventory at the lower-of-cost-or-market, on an individual-item basis.
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Item No.
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Quantity
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Cost per Unit
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Cost to Replace
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Estimated Selling Price
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Cost of Completion and Disposal
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Normal Profit
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1320
|
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1,500
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$5.86
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$5.49
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$8.24
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$0.64
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$2.29
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1333
|
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1,200
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4.94
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4.21
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6.22
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0.92
|
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0.92
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1426
|
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1,100
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8.24
|
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6.77
|
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9.15
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0.73
|
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1.83
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1437
|
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1,300
|
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6.59
|
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5.67
|
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5.86
|
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0.82
|
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1.65
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1510
|
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1,000
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4.12
|
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3.66
|
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5.95
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1.46
|
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1.10
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1522
|
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800
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5.49
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4.94
|
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7.14
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0.73
|
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0.92
|
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1573
|
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3,300
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3.29
|
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2.93
|
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4.58
|
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1.37
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0.92
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1626
|
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1,300
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8.60
|
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9.52
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10.98
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0.92
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1.83
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From the information above, determine the amount of Sedato Company's inventory.
Question 2
On March 10, 2014, No Doubt Company sells equipment that it purchased for $352,800 on August 20, 2007. It was originally estimated that the equipment would have a life of 12 years and a salvage value of $30,870 at the end of that time, and depreciation has been computed on that basis. The company uses the straight-line method of depreciation.
Compute the depreciation charge on this equipment for 2007, for 2014, and the total charge for the period from 2008 to 2013, inclusive, under each of the six following assumptions with respect to partial periods. (Round answers to 0 decimal places, e.g. $45,892.)
(1) Depreciation is computed for the exact period of time during which the asset is owned.
(2) Depreciation is computed for the full year on the January 1 balance in the asset account.
(3) Depreciation is computed for the full year on the December 31 balance in the asset account.
(4) Depreciation for one-half year is charged on plant assets acquired or disposed of during the year.
(5) Depreciation is computed on additions from the beginning of the month following acquisition and on disposals to the beginning of the month following disposal.
(6) Depreciation is computed for a full period on all assets in use for over one-half year, and no depreciation is charged on assets in use for less than one-half year.
Question 3
Santana Company exchanged equipment used in its manufacturing operations plus $3,990 in cash for similar equipment used in the operations of Delaware Company. The following information pertains to the exchange.
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Santana Co.
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Delaware Co.
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Equipment (cost)
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$55,860
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$55,860
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Accumulated depreciation
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37,905
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19,950
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Fair value of equipment
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26,933
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30,923
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Cash given up
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3,990
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(a) Prepare the journal entries to record the exchange on the books of both companies. Assume that the exchange lacks commercial substance. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)
(b) Prepare the journal entries to record the exchange on the books of both companies. Assume that the exchange has commercial substance. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)