1) A company is evaluating the purchase of a machine for $750,000 with a six-year
useful life and no salvage value. The company uses straight-line depreciation and it
assumes that the annual net cash flow from using the machine will be received
uniformly throughout each year. In calculating the accounting rate of return, what is the
company’s average investment?
2) Montez and Flair formed a partnership. Montez contributed $15,000 cash and
accounts receivable worth $11,000. Flair contributed cash of $5,000; inventory valued
at $16,000; and supplies valued at $2,000. Prepare the journal entries to record each
partner’s investment in the new partnership.
3) A company’s sales in Year 1 were $280,000, and its sales in Year 2 were $341,600.
Using Year 1 as the base year, what is the sales trend percent for Year 2?
4) Expenditures directly associated with the manufacture of finished goods that include
direct materials and direct labor are _____________________ costs.
5) _________________ are debt securities a company intends and is able to hold until
the maturity date.
6) A company had the following ending inventory costs:
Required:
Calculate the lower of cost or market (LCM) value for each individual item.
7) Bannister invested $110,000 and Wilder invested $99,000 in a new partnership. Their
partnership agreement called for Wilder to receive a $70,000 annual salary allowance.
Under this agreement, what are the income or loss shares of the partners if the annual
partnership income is $90,000?
