ACCT 2110 EXAM 4 PROBLEMS UPDATED ACTUAL
QUESTIONS AND CORRECT ANSWERS
Question:
Luper Company acquired a tract of land that contained
iron deposits for $2,500,000. Luper spent $120,000 to
access the iron ore. Luper estimates that 2,000,000 tons
of ore will be extracted. The estimated value of the land
after the ore is extracted is $100,000. During the current
year, Luper extracts 150,000 tons of ore.
What is the amount of natural resources that would be
recorded by Luper at acquisition?
Answer:
2,620,000
Question:
Luper Company acquired a tract of land that contained
iron deposits for $2,500,000. Luper spent $120,000 to
access the iron ore. Luper estimates that 2,000,000 tons
of ore will be extracted. The estimated value of the land
after the ore is extracted is $100,000. During the current
year, Luper extracts 150,000 tons of ore.
What depletion rate would be used by Luper Company?
Answer:
1.26 per ton
- (Cost - Residual Value) / Estimated Total Resource
Question:
Luper Company acquired a tract of land that contained
iron deposits for $2,500,000. Luper spent $120,000 to
access the iron ore. Luper estimates that 2,000,000 tons
of ore will be extracted. The estimated value of the land
after the ore is extracted is $100,000. During the current
year, Luper extracts 150,000 tons of ore.
How much of the natural resource would be recorded as
depleted for the current year?
Answer:
$189,000
- Depletion Rate of $1.26 per ton x actual tons extracted of 150,000
Question:
Purchase of Inventory (Perpetual)
- March 10: Byers purchased inventory for $22,000 on
account from Hawkins, 2/10, n/30, FOB Shipping Point
- March 10: Byers paid $150 in shipping costs to ABC
Transport related to the inventory purchase
, Answer:
1. Inventory 22,000
Accounts Payable 22,000
2. Inventory 150
Cash 150
Question:
Return of Inventory (Perpetual)
- March 12: Byers returned $5,000 of merchandise
purchased on account from Hawkins because it was
defective
Answer:
Accounts Payable 5,000
Inventory 5,000
Question:
Payment for Inventory (Perpetual)
- March 20: Byers paid for remaining amount due from
March 10th purchase, taking advantage of the purchase
discount
Answer:
Accounts Payable 17,000
Cash 16,660
Inventory 340
- Purchase - Return : (22,000 - 5,000 = 17,000)
- Discount Rate : (17,000 x 2% = 340); (17,000 - 340 = 16,660)
Question:
Sale of Inventory (Perpetual)
- April 3: Byers sold entire amount of inventory
purchased from Hawkins on account to Harrington for
$33,000 terms 2/10, n/30
- Record the sale and adjusting entry
Answer:
1. Accounts Receivable 33,000
Sales Revenue 33,000
2. COGS Expense 16,810
Inventory 16,810
- Purchase + (22,000 + 150) - 5,000 = 17,150
- Discount Rate : (17,000 x 2%) = 340
- (17,150 - 340) = 16,810
Question:
Perpetual Inventory System: FIFO
- 6/1 Beg. Inventory: Units (200) ; Cost/Unit ($10)
- 6/9 Purchase: Units (300) ; Cost/Unit ($12)
- 6/14 Sold 400 Units
- 6/22 Purchase: Units (250) ; Cost/Unit ($14)
QUESTIONS AND CORRECT ANSWERS
Question:
Luper Company acquired a tract of land that contained
iron deposits for $2,500,000. Luper spent $120,000 to
access the iron ore. Luper estimates that 2,000,000 tons
of ore will be extracted. The estimated value of the land
after the ore is extracted is $100,000. During the current
year, Luper extracts 150,000 tons of ore.
What is the amount of natural resources that would be
recorded by Luper at acquisition?
Answer:
2,620,000
Question:
Luper Company acquired a tract of land that contained
iron deposits for $2,500,000. Luper spent $120,000 to
access the iron ore. Luper estimates that 2,000,000 tons
of ore will be extracted. The estimated value of the land
after the ore is extracted is $100,000. During the current
year, Luper extracts 150,000 tons of ore.
What depletion rate would be used by Luper Company?
Answer:
1.26 per ton
- (Cost - Residual Value) / Estimated Total Resource
Question:
Luper Company acquired a tract of land that contained
iron deposits for $2,500,000. Luper spent $120,000 to
access the iron ore. Luper estimates that 2,000,000 tons
of ore will be extracted. The estimated value of the land
after the ore is extracted is $100,000. During the current
year, Luper extracts 150,000 tons of ore.
How much of the natural resource would be recorded as
depleted for the current year?
Answer:
$189,000
- Depletion Rate of $1.26 per ton x actual tons extracted of 150,000
Question:
Purchase of Inventory (Perpetual)
- March 10: Byers purchased inventory for $22,000 on
account from Hawkins, 2/10, n/30, FOB Shipping Point
- March 10: Byers paid $150 in shipping costs to ABC
Transport related to the inventory purchase
, Answer:
1. Inventory 22,000
Accounts Payable 22,000
2. Inventory 150
Cash 150
Question:
Return of Inventory (Perpetual)
- March 12: Byers returned $5,000 of merchandise
purchased on account from Hawkins because it was
defective
Answer:
Accounts Payable 5,000
Inventory 5,000
Question:
Payment for Inventory (Perpetual)
- March 20: Byers paid for remaining amount due from
March 10th purchase, taking advantage of the purchase
discount
Answer:
Accounts Payable 17,000
Cash 16,660
Inventory 340
- Purchase - Return : (22,000 - 5,000 = 17,000)
- Discount Rate : (17,000 x 2% = 340); (17,000 - 340 = 16,660)
Question:
Sale of Inventory (Perpetual)
- April 3: Byers sold entire amount of inventory
purchased from Hawkins on account to Harrington for
$33,000 terms 2/10, n/30
- Record the sale and adjusting entry
Answer:
1. Accounts Receivable 33,000
Sales Revenue 33,000
2. COGS Expense 16,810
Inventory 16,810
- Purchase + (22,000 + 150) - 5,000 = 17,150
- Discount Rate : (17,000 x 2%) = 340
- (17,150 - 340) = 16,810
Question:
Perpetual Inventory System: FIFO
- 6/1 Beg. Inventory: Units (200) ; Cost/Unit ($10)
- 6/9 Purchase: Units (300) ; Cost/Unit ($12)
- 6/14 Sold 400 Units
- 6/22 Purchase: Units (250) ; Cost/Unit ($14)
