Valuing Inventory and Recording Entries Using Relative Sales Value Method Arizona Developers purchased and subdivided a tract of land that cost $882,000 cash into garden lots. The garden lots were divided on the following basis. ■10% used for public walkways and parking 50% divided into 75 lots selling at $4,000 each ( Category 1) 130% divided into 200 lots selling at $3,000 each ( Category 2) 10% divided into 50 lots selling at $2,000 each ( Category 3) Required a. Prepare the entry for the purchase of the lots for cash. Use the relative sales value method to allocate the total cost of $900,000 to the three inventory categories of lots. Assume a perpetual inventory system. b. During the final month of the year, the walkways and parking were completed (included in the $900,000 cost) and several sales occurred. Inventory remaining at year-end was: 20 of the $4,000 lots; 50 of the $3,000 lots; and 10 of the $2,000 lots. (1) Compute the valuation of inventory at year-end. (2) Prepare the entry for sales and cost of goods sold for each category of lots separately. Assume cash sales.

Valuing Inventory and Recording Entries Using Relative Sales Value Method Arizona Developers purchased and subdivided a tract of land that cost $882,000 cash into garden lots. The garden lots were divided on the following basis. ■10% used for public walkways and parking 50% divided into 75 lots selling at $4,000 each ( Category 1) 130% divided into 200 lots selling at $3,000 each ( Category 2) 10% divided into 50 lots selling at $2,000 each ( Category 3) Required a. Prepare the entry for the purchase of the lots for cash. Use the relative sales value method to allocate the total cost of $900,000 to the three inventory categories of lots. Assume a perpetual inventory system. b. During the final month of the year, the walkways and parking were completed (included in the $900,000 cost) and several sales occurred. Inventory remaining at year-end was: 20 of the $4,000 lots; 50 of the $3,000 lots; and 10 of the $2,000 lots. (1) Compute the valuation of inventory at year-end. (2) Prepare the entry for sales and cost of goods sold for each category of lots separately. Assume cash sales.

Financial Reporting, Financial Statement Analysis and Valuation

8th Edition

ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Chapter2: Asset And Liability Valuation And Income Recognition

Section: Chapter Questions

Problem 11PC: Costs to Be Included in Historical Cost Valuation. At a cost of 200,000, Assume In-N-Out Burger...

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