Posted: September 16th, 2017
UMUC Intermediate Accounting I Final Exam, Part 2
Intermediate Accounting I Final Exam, Part 2
INSTRUCTIONS:
You may use your textbook to answer the questions. You may not use any other writtenmaterial. You may not discuss the exam questions or your answers with your classmates or anyother person.
Save your answers as a PDF and submit your work in your Leo Assignment folder.Show all computations for credit.
1. Tablin Company has determined its December 31, 2013 inventory on a FIFO basis at$250,000. Information pertaining to that inventory follows:
| Estimated selling price | $255,000 |
| Estimated cost of disposal | 10,000 |
| Normal profit margin | 30,000 |
| Current replacement cost | 225,000 |
Tablin records losses that result from applying the lower-of-cost-or-market rule. What is the amount of the loss that Tablin should recognize for 2013?
2. Westford Corporation acquired two inventory items at a lump-sum cost of $40,000. Theacquisition included 3,000 units of product CF, and 7,000 units of product 3B. CF normally sellsfor $12 per unit, and 3B for $4 per unit. If Westford sells 1,000 units of CF, what amount ofgross profitshould it recognize?
3. On January 1, 2005, Helena Corporation purchased for $152,000, equipment having a usefullife of ten years and an estimated salvage value of $8,000. Helena has recorded monthlydepreciation of the equipment on the straight-line method. On December 31, 2013, theequipment was sold for $28,000. Prepare the journal entry to record the sale.
4. Kelvin Company traded machinery with a book value of $285,000 and a fair value of $270,000. It received in exchange from Marlin Company a machine with a fair value of$300,000. Kelvin also paid cash of $30,000 in the exchange. Marlin’s machine has a book valueof $285,000. What amount of gain or loss should Kelvin recognize on the exchange? (Note:The exchange lacks commercial substance.)
5. Savin Co. purchased land as a factory site for $600,000. Savin paid $60,000 to tear down twobuildings on the land. Salvage was sold for $5,400. Legal fees of $3,480 were paid for title investigation and making the purchase. Title insurance (for the land purchase) cost $2,400.Architect’s fees were $31,200. Liability insurance during construction cost $2,600. Excavationcost $10,440. The contractor was paid $2,200,000. Interest costs during construction were$170,000.
a) Calculate the cost of the land.
b) Calculate the cost of the building.
6. In January 2013, Jason Mining Corporation purchased a mineral mine for $4,200,000 withremovable ore estimated by geological surveys at 2,500,000 tons. The property has an estimatedvalue of $400,000 after the ore has been extracted. Jason incurred $1,150,000 of developmentcosts preparing the property for the extraction of ore. During 2013, 340,000 tons were removed and 300,000 tons were sold. For the year ended December 31, 2013, Jason should include what amount of depletion in its cost of goods sold?
7. Sumner, Inc. purchased equipment in 2011 at a cost of $600,000. Two years later it became apparent to Sumner, Inc. that this equipment had suffered an impairment of value. In early 2013,the book value of the asset is $360,000 and it is estimated that the fair value is now only$240,000. Prepare the journal entry to record the impairment.
8. Gray Corporation purchased a depreciable asset for $420,000 on January 1, 2010. Theestimated salvage value is $42,000, and the estimated total useful life is 9 years. The straight-linemethod is used for depreciation. In 2013, Garrison changed its estimates to a useful life of 5 years (from the original date of purchase) with a salvage value of $70,000. What is 2013depreciation expense?
9. Tunlaw Company’s 12/31/13 balance sheet reports assets of $6,000,000 and liabilities of$2,500,000. All of Tunlaw’s assets’ book values approximate their fair value, except for land, which has a fair value that is $400,000 greater than its book value. On 12/31/13, Benedict Corporation paid $6,100,000 to acquire Tunlaw. What amount of goodwill should Benedictrecord as a result of this purchase?
| 10. Dallas Corp.’s trial balance of income statement
2013 included the following: Sales |
accounts for the year ended December 31,Debit Credit | |
| $280,000 | ||
| Cost of goods sold | $100,000 | |
| Administrative expenses | 50,000 | |
| Loss on sale of equipment | 18,000 | |
| Commissions to salespersons | 16,000 | |
| Interest revenue | 10,000 | |
| Freight-out | 4,000 | |
| Loss due to earthquake damage | 24,000 | |
| Bad debt expense | 6,000 |
Other information:
Dallas Corp’s income tax rate is 30%.
Instructions: Prepare a multiple-step income statement in good form.
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