1 accounting question

Lola industries purchased the following assets and constructed a building as well. All of this was done during the current year. Assets 1 and 2: These assets were purchased as a lump sum for $110,000 cash. The following was gathered: Description Machinery Office Equipment Initial Cost on Seller's Books $100,000 70,000 Depreciation to Date on Seller's Books $40,000 25,000 Book Value on Seller's Books $60,000 45,000 Appraised Value $81,000 44,000 Asset 3 Office Equipment was acquired by issuing 300 shares of $6 par value common stock. The stock had a market value of $14 per share. Construction of Building A building was constructed on land purchased last year at a cost of $150,000. Construction began on February 1 and was completed on November 1. The payments to the contractor were as follows: Date 2/1 6/1 9/1 11/1 Payment $100,000 380,000 460,000 120,000 To finance construction of the building, a $600,000 10% construction loan was taken out on February 1. The loan was repaid on November 1. The firm had $200,000 of other outstanding debt during the year at a borrowing rate of 7%. Required: Record all of the applicable acquisition/construction entries for each of these assets. Lola industries purchased the following assets and constructed a building as well. All of this was done during the current year. Assets 1 and 2: These assets were purchased as a lump sum for $110,000 cash. The following was gathered: Description Machinery Office Equipment Initial Cost on Seller's Books $100,000 70,000 Depreciation to Date on Seller's Books $40,000 25,000 Book Value on Seller's Books $60,000 45,000 Appraised Value $81,000 44,000 Asset 3 Office Equipment was acquired by issuing 300 shares of $6 par value common stock. The stock had a market value of $14 per share. Construction of Building A building was constructed on land purchased last year at a cost of $150,000. Construction began on February 1 and was completed on November 1. The payments to the contractor were as follows: Date 2/1 6/1 9/1 11/1 Payment $100,000 380,000 460,000 120,000 To finance construction of the building, a $600,000 10% construction loan was taken out on February 1. The loan was repaid on November 1. The firm had $200,000 of other outstanding debt during the year at a borrowing rate of 7%. Required: Record all of the applicable acquisition/construction entries for each of these assets. Grande Incorporated, a window installation company, is preparing its annual financial statements for the year ended December 31, 2009 and the following information in dollars is available: Raw Material Aluminum Cedar shake siding Lowered glass doors Thermal windows Total FIFO Cost 70,000 84,000 116,000 110,000 380,000 Replacement Cost 50,000 90,000 120,000 150,000 410,000 Sales Price 79,000 81,000 150,000 145,000 455,000 Selling Expenses are 15% of Sales. Normal Profit Margin is 20% of Sales. At December 31, 2009, the balance in Grande's Raw Material inventory account was $380,000 and the Allowance to Reduce Inventory to Market had a credit balance of $50,000. Required: (a) Prepare a table with the headings below (and a row for each type of raw material) and determine the proper balance in the Allowance to Reduce Inventory to Market account at December 31, 2009. Raw Material FIFO Cost Replacement Cost Ceiling Floor Deemed Market Value Lower of Cost or Market (20 points) (b) Determine the amount of gain or loss that would be recorded due to the change in the Allowance to Reduce Inventory to Market account. (5 points) Grande Incorporated, a window installation company, is preparing its annual financial statements for the year ended December 31, 2009 and the following information in dollars is available: Raw Material Aluminum Cedar shake siding Lowered glass doors Thermal windows Total FIFO Cost 70,000 84,000 116,000 110,000 380,000 Replacement Cost 50,000 90,000 120,000 150,000 410,000 Sales Price 79,000 81,000 150,000 145,000 455,000 Selling Expenses are 15% of Sales. Normal Profit Margin is 20% of Sales. At December 31, 2009, the balance in Grande's Raw Material inventory account was $380,000 and the Allowance to Reduce Inventory to Market had a credit balance of $50,000. Required: (a) Prepare a table with the headings below (and a row for each type of raw material) and determine the proper balance in the Allowance to Reduce Inventory to Market account at December 31, 2009. Raw Material FIFO Cost Replacement Cost Ceiling Floor Deemed Market Value Lower of Cost or Market (20 points) (b) Determine the amount of gain or loss that would be recorded due to the change in the Allowance to Reduce Inventory to Market account. (5 points)