Identify or define the following term: historical cost.
New York Sales Inc. uses the conventional retail method to estimate its ending
inventories. The following data has been summarized for December 31, 2016:
Required:
Compute the cost-to-retail percentage used by New York Sales Inc.
Accorsi & Sons specializes in selling and installing upscale home theater systems. On
March 1, 2016, Accorsi sold a premium home theater package that includes a projector,
set of surround speakers, and high quality leather seats, along with complete installation
service, for $32,500. If sold separately, each of these goods and services would have
cost $15,000 (projector), $12,500 (speakers), $17,500 (seats), and $3,000 (installation),
respectively. Required:, How much of the transaction price would be allocated to the
projector, the speakers, the leather seats, and the installation service, assuming that each
of these four parts of the contract is a separate performance obligation? Show your
work.
The following partial income statement and balance sheet information (in $ millions)
comes from the Annual Report of Saratoga Springs Co. for the year ending 12/31/2016:
Required: Compute the following amounts for Saratoga Springs Co.
Its average days in inventory for 2016. Round your final answer to one decimal place.
Why would an oil company argue to use the full-cost method of accounting for oil and
gas exploration costs?
Patty’s Pet Store purchased merchandise on October 10, 2016, at a price of $35,000,
subject to credit terms of 2/10, n/30. Patty’s uses the gross method for recording
purchases and uses perpetual inventory system.
Required:
1> Prepare the journal entry to record the purchase.
2> Prepare the journal entry to record the payment of one-half the invoice amount on
October 18, 2016.
3> Prepare the journal entry to record the payment of the balance of the amount due on
November 8, 2016.
On June 14, 2016, Rumsfeld Company sold 100 air-conditioning units to Powell
Heating and Cooling. The units list for $600 each, but Powell was granted a 25% trade
discount. All of Rumfeld’s sales are subject to terms 2/10, n/30. Rumsfeld uses the gross
method of accounting for sales discounts.
Required:
1> Prepare the journal entry to record the sale.
2> Prepare the journal entry to record receipt of the payment, assuming the correct
amount was received on June 22, 2016.
3> Prepare the journal entry to record receipt of the payment, assuming the correct
amount was received on July 10, 2016.