Ford Inc. exchanged land and $7,500 cash for material handling equipment. The land
had a book value of $75,000 and a fair value of $105,000. Assume the exchange has
commercial substance.
Required:
Prepare the journal entry to record the exchange.
Listed below are 5 terms followed by a list of phrases that describe or characterize each
of the terms. Match each phrase with the number for the correct term.
On January 1, 2016, Morton Sales Co. issued zero-coupon bonds with a face value of
$6 million for cash. The bonds mature in 10 years and were issued at a price of
$3,050,100. Required: What was the annual effective interest rate in the market when
the bonds were issued?
In the following questions, inventory errors are noted for 2016. Assume that the errors
are not discovered until 2017, and that the company uses a periodic inventory system.
Indicate the effect of the error, if any, on the accounts noted in the columns, using the
following code:
U = Understated; O = Overstated; NE = No effect
Why is the statement of cash flows required as part of the set of external financial
statements?
Manila Bread Company uses the average cost retail method to estimate its ending
inventories. The following data has been summarized for the year 2016:
Required:
Estimate the ending inventory as of December 31, 2016.
On January 1, 2015, RAY Co. adopted the dollar-value LIFO method for its one
inventory pool. The pool’s value on this date was $300 million. The 12/31/15 inventory
valued at year-end costs was $385 million. The 12/31/15 inventory, using dollar-value
LIFO was $355 million.
Required:
Calculate 2015 cost index for RAY’s inventory.
Listed below are five terms followed by a list of phrases that describe or characterize
each of the terms. Match each phrase with the number for the most correct term.
