The document contains information about various asset acquisitions and constructions by Impala Company. It provides details of the company receiving land valued at $81,000 as a donation, issuing stock to acquire land and buildings valued at $810,000, and constructing machinery internally. The appropriate accounting entries to record these transactions debit various asset accounts and credit equity/expense accounts.

1. Question 1
E9-1
(Lower of Cost or Market)
The inventory of Oheto Company on December 31, 2011, consists of the following items.
Cost to
Part No. Quantity Cost per Unit Replace per Unit
110 600 $95 $100
111 1,000 60 52
112 500 80 76
113 200 170 180
120 400 205 208
a
121 1,600 16 14
122 300 240 235
a
Part No. 121 is obsolete and has a realizable value of $0.50 each as a scrap.
Lower of
Part No. Quantity Cost Market Total Cost Total Market Cost or Market
110 600 $95 $100.00 $57,000 $60,000 $57,000
111 1,000 60 52.00 60,000 52,000 52,000
112 500 80 76.00 40,000 38,000 38,000
113 200 170 180.00 34,000 36,000 34,000
120 400 205 208.00 82,000 83,200 82,000
121 1,600 16 0.50 25,600 800 800
122 300 240 235.00 72,000 70,500 70,500
Totals $370,600 $340,500 $334,300
(a) $334,300
(b) $340,500
Question 2
E9-12
(Gross Profit Method)
Astaire Company uses the gross profit method to estimate inventory for monthly reporting
purposes. Presented below is information for the month of May.
Inventory, May 1 $160,000
Purchases (gross) 640,000
Freight-in 30,000
Sales 1,000,000
Sales returns 70,000
Purchase discounts 12,000
(a) Inventory, May 1 (at cost) $160,000
Purchases (at cost) 640,000
Purchase discounts (12,000)
Freight-in 30,000
Goods available (at cost) 818,000
Sales (at selling price) $1,000,000
Sales returns (at selling price) (70,000)
Net sales (at selling price) 930,000
Less: Gross profit (25% of $930,000) 232,500
Sales (at cost) 697,500
Approximate inventory, May 31 (at cost) $120,500
(b) Gross profit as a percent of sales must be computed:

2. 25%
= 20% of sales
100% + 25%
Inventory, May 1 (at cost) $160,000
Purchases (at cost) 640,000
Purchase discounts (12,000)
Freight-in 30,000
Goods available (at cost) 818,000
Sales (at selling price) $1,000,000
Sales returns (at selling price) (70,000)
Net sales (at selling price) 930,000
Less gross profit (20% of $930,000l) 186,000
Sales (at cost) 744,000
Approximate inventory, May 31 (at cost) $74,000
Question 3
E10-5
(Treatment of Various Costs)
Allegro Supply Company, a newly formed corporation, incurred the following expenditures
related to Land, to Buildings, and to Machinery and Equipment.
Abstract company's fee for title search $ 520
Architect's fees 3,170
Cash paid for land and dilapidated building thereon 92,000
Removal of old building $20,000
Less: Salvage 5,500 14,500
Interest on short-term loans during construction 7,400
Excavation before construction for basement 19,000
Machinery purchased (subject to 2% cash discount,
which was not taken) 65,000
Freight on machinery purchased 1,340
Storage charges on machinery, necessitated by
noncompletion of building when machinery was 2,180
delivered
New building constructed (building construction took 6
months from date of purchase of land and old building) 485,000
Assessment by city for drainage project 1,600
Hauling charges for delivery of machinery from storage to
new building 620
Installation of machinery 2,000
Trees, shrubs, and other landscaping after completion of
building (permanent in nature) 5,400
Determine the amounts that should be debited to Land, to Buildings, and to Machinery and
Equipment. Assume the benefits of capitalizing interest during construction exceed the cost
of implementation.
Question 3

3. Machinery
Land Buildings & Equipment Other
Abstract fees $520 $ 0 $ 0 $ 0
Architect's fees 0 3,170 0 0
Cash paid for land and old
92,000 0 0 0
building
Removal of old building
14,500 0 0 0
($20,000 - $5,500)
Interest on loans during
0 7,400 0 0
construction
Excavation before
0 19,000 0 0
construction
Misc. exp.
Machinery purchased 0 0 63,700 1,300
(Disc. lost)
Freight on machinery 0 0 1,340 0
Storage charges caused by Misc. exp.
0 0 0 2,180
noncompletion of bldg (loss)
New building 0 485,000 0 0
Assessment by city 1,600 0 0 0
Hauling charges - Misc. exp.
0 0 0 620
machinery (loss)
Installation - machinery 0 0 2,000 0
Landscaping 5,400 0 0 0
$114,020 $514,570 $67,040 $4,100
Question 4
E10-12
(Entries for Asset Acquisition, Including Self-Construction)
Below are transactions related to Impala Company.
(a) The City of Pebble Beach gives the company 5 acres of land as a plant site. The market value of
this land is determined to be $81,000.
(b) 14,000 shares of common stock with a par value of $50 per share are issued in exchange for
land and buildings. The property has been appraised at a fair market value of $810,000, of
which $180,000 has been allocated to land and $630,000 to buildings. The stock of Impala
Company is not listed on any exchange, but a block of 100 shares was sold by a stockholder 12
months ago at $65 per share, and a block of 200 shares was sold by another stockholder 18
months ago at $58 per share.
(c) No entry has been made to remove from the accounts for Materials, Direct Labor, and Overhead
the amounts properly chargeable to plant asset accounts for machinery constructed during the
year. The following information is given relative to costs of the machinery constructed.
Materials used $12,500
Factory supplies used 900
Direct labor incurred 16,000
Additional overhead (over regular) caused by construction
of machinery, excluding factory supplies used 2,700
Fixed overhead rate applied to regular manufacturing operations 60% of direct labor cost
Cost of similar machinery if it had been purchased from outside
44,000
suppliers

4. Description/Account Debit Credit
(a) Land 81,000
Contribution revenue 81,000
(b) Buildings 630,000
Land 180,000
Common stock ($50 × $14,000) 700,000
Paid-in capital in excess of par* 110,000
(c) Machinery 41,700
Direct labor 16,000
Factory overhead **13,200
Materials 12,500
• Since the market value of the stock is not determinable, the market value of the
property is used as the basis for recording the asset and issuance of the stock.
** Fixed overhead applied (60% × $16,000) $9,600
Additional overhead 2,700
Factory supplies used 900
$13,200