1.

Neighbourhood Builders Inc. purchased land and an office building for a combined price of $339700. The total appraised value of the land is $100,000 and the building was $300,000.

Required:

At what amount would Neighbourhood Builders Inc. record the office building on their balance sheet at the time of purchase? Round your answer to the nearest dollar.

2.

The following information is taken from the records of Perfect Fit Fashions Inc. for 2019 and 2020:

	2019	2020
Beginning inventory	$29,000	$41,000
Ending inventory	$41,000	$31,000
Cost of goods sold	$52,000	$48,000
Gross profit	$25,000	$29,000

The company performed an inventory count at the end of 2019 and 2020 and discovered that the ending inventory amounts listed above were incorrect as follows:

	Error in Ending Inventory	$ Amount
2019	Overstated	$15700
2020	Understated	$8200

Required:

What is the corrected net profit for 2019?

3. Calculate the present value of the following: $40,000 received at the end of six years at 5%.

4.

Mutual Re. Corporation purchased $2,000,000 of 10-year, 5% bonds on January 1, 2020, at a price to yield a market interest rate of 6%. Interest is paid annually on the bonds.

Required:

Compute the price Mutual Re. Corporation paid for the bond investment (its present value).

5.

If a company uses FIFO and prices over the year are decreasing, would you expect the cost of goods sold and ending inventory amounts to be higher or lower than these amounts using the weighted average cost method? Drag and drop your response.

Cost of goods sold	blank
Ending inventory