16. A company purchased land for $84,000 cash. Real estate brokers' commission was $5,000 and $7,000 was spent for demolishing an old building on the land before construction of a new building could start. Proceeds from salvage of the demolished building was $1,200. Under the historical cost principle, the cost of land would be recorded at

a. $94,800.

b. $84,000.

c. $89,800.

d. $96,000

17. Which of the following is a true statement about inventory systems?

a. Periodic inventory systems require more detailed inventory records.

b. Perpetual inventory systems require more detailed inventory records.

c. A periodic system requires cost of goods sold be determined after each sale.

d. A perpetual system determines cost of goods sold only at the end of the accounting period.

18. At December 31, 2012 Mohling Companys inventory records indicated a balance of $652,000. Upon further investigation it was determined that this amount included the following:

$112,000 in inventory purchases made by Mohling shipped from the seller 12/27/12 terms FOB destination, but not due to be received until January 2nd

$74,000 in goods sold by Mohling with terms FOB destination on December 27^th. The goods are not expected to reach their destination until January 6^th.

$6,000 of goods received on consignment from Dollywood Company

What is Mohlings correct ending inventory balance at December 31, 2012?

a. $540,000

b. $646,000

c. $460,000

d. $534,000

19. Financial information is presented below:

Operating expenses $ 35,000

Sales returns and allowances 12,000

Sales discounts 3,000

Sales revenue 140,000

Cost of goods sold 85,000

The profit margin would be

a. .32.

b. .16.

c. .03.

d. .04.