Final Written Exam

Intermediate Accounting

90 Points

1.Given the following information for Goode Company:

May 1

Beginning inventory

18 units @ $4 per unit

May 7

Purchase

12 units @ $5 per unit

May 10

Sale

14 units

May 17

Purchase

10 units @ $6 per unit

May 19

Sale

4 units

Required:

Answer the following questions for Goode Company:

a.

If FIFO is in use, what is the total ending inventory in dollars?

b.

If perpetual LIFO is in use, what is the cost of goods sold for the month?

c.

If weighted average is in use, what is the ending inventory?

2.The following data has been provided by Lee Company regarding its inventory purchases and sales throughout the year.

Transaction

Units

Cost per Unit

1-Jan

Balance

175

$86

14-Mar

Sale

55

23-May

Purchase

135

90

21-Aug

Sale

100

5-Nov

Purchase

175

91

18-Nov

Sale

100

30-Nov

Sale

100

5-Dec

Sale

100

10-Dec

Purchase

25

95

Required:

Compute the cost of goods sold and ending inventory using the perpetual inventory system for the FIFO cost flow assumption.

3.The following data has been provided by Lee Company regarding its inventory purchases and sales throughout the year.

Transaction

Units

Cost per Unit

1-Jan

Balance

175

$86

14-Mar

Sale

55

23-May

Purchase

135

90

21-Aug

Sale

100

5-Nov

Purchase

175

91

18-Nov

Sale

100

30-Nov

Sale

100

5-Dec

Sale

100

10-Dec

Purchase

25

95

Required:

Compute the cost of goods sold and ending inventory using the perpetual inventory system for the LIFO cost flow assumption.

4.On August 1, Gold Company exchanged a machine for a similar machine owned by Cowboy Company and also received $7,000 cash from Cowboy Company. Gold's machine had an original cost of $80,000, accumulated depreciation to date of $14,500, and a fair market value of $60,000. Cowboy's machine had an original cost of $95,000 and a book value of $45,000 and a fair value of $53,000.

Required:

a.

Prepare the necessary journal entry by Gold Company to record this transaction.

b.

Prepare the necessary journal entry by Cowboy Company to record this transaction.

5.On January 3, 2016, Mercury Company began self-constructing an asset that qualified for interest capitalization. On January 5, Mercury borrowed $300,000 on an 8% construction loan. In addition, Mercury had $400,000 of 6% notes payable and $600,000 of 9% bonds payable outstanding. By December 31, expenditures (occurring evenly throughout the year) of $900,000 had been made on the asset. Investment of unused funds during the year yielded $1,200 of interest revenue.

Required:

Compute the amount of interest that should be capitalized during 2016.

6. The Jefferson Co. purchased a machine on January 1, 2016. The machine cost $595,000. It had an estimated life of ten years, or 30,000 units, and an estimated residual value of $40,000. In 2016, Jeffries produced 3,000 units.

Required:

Compute the depreciation charge for 2016 using each of the following methods:

a.

Double-declining-balance method

b.

Activity method (units of output)

c.

Sum-of-the-years'-digits method

d.

Straight-line method