I need a better understanding of these two problems.
Day Company adopted the dollar-value LIFO inventory method on 12/31/06. On this date, its inventory consisted of the following items.
Item Number of Units Cost Per Unit Total Cost
X 200 $2.00 $ 400
Y 600 4.50 2,700
Additional information: December 31
1. Units of X in inventory 300 400
2. Cost of each X unit $3.00 $3.25
3. Units of Y in inventory 800 1,200
4. Cost of each Y unit $5.50 $6.00
(a) Compute the price index for 2007. Round to 2 decimal places.
(b) Calculate the 12/31/07 inventory. Label all numbers.
(c) Compute the price index for 2008. Round to 2 decimal places.
(d) Calculate the 12/31/08 inventory. Label all numbers.
Capitalizing acquisition costs.
Myers Manufacturing Co. was incorporated on 1/2/07 but was unable to begin manufacturing activities until 8/1/07 because new factory facilities were not completed until that date. The Land and Building account at 12/31/07 per the books was as follows:
Date Item Amount
1/31/07 Land and dilapidated building $200,000
2/28/07 Cost of removing building 4,000
4/1/07 Legal fees 6,000
5/1/07 Fire insurance premium payment 5,400
5/1/07 Special tax assessment for streets 4,500
5/1/07 Partial payment of new building construction 150,000
8/1/07 Final payment on building construction 150,000
8/1/07 General expenses 30,000
12/31/07 Asset write-up 75,000
1. To acquire the land and building on 1/31/07, the company paid $100,000 cash and 1,000 shares of its common stock (par value = $100/share) which is very actively traded and had a market value per share of $170.
2. When the old building was removed, Myers paid Kwik Demolition Co. $4,000, but also received $1,500 from the sale of salvaged material.
3. Legal fees covered the following:
Cost of organization $2,500
Examination of title covering purchase of land 2,000
Legal work in connection with the building construction 1,500
4. The fire insurance premium covered premiums for a three-year term beginning May 1, 2007.
5. General expenses covered the following for the period 1/2/07 to 8/1/07.
President's salary $20,000
Plant superintendent covering supervision of new building 10,000
6. Because of the rising land costs, the president was sure that the land was worth at least $75,000 more than what it cost the company.
Determine the proper balances as of 12/31/07 for a separate land account and a separate building account. Use separate T-accounts (one for land and one for building) labeling all the relevant amounts and disclosing all computations.
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Detailed solution in excel format.