Which of the following constitutes fraudulent misrepresentation?

Which of the following constitutes fraudulent misrepresentation?

	The defendant intentionally undertook steps to cause a breach of contract.
	Someone enters an industry with the sole intent of driving another firm out of business.
	The plaintiff suffered damages because of his reliance on a misrepresentation.
	The defendant maligned the plaintiff’s reputation by making derogatory statements.

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A real estate management company buys an abandoned apartment complex for $4.5 million. It pays a construction company $500,000 to demolish the old building. Which of the following is true?

A real estate management company buys an abandoned apartment complex for $4.5 million. It pays a construction company $500,000 to demolish the old building. Which of the following is true?

	The company would record $4.5 million as the cost of the land.
	The company would record $500,000 as demolition expense.
	The company would record $4 million as the cost of the land.
→	The company would record $5 million as the cost of the land.

Explanation 

 

All necessary expenditures to acquire an asset and prepare it for its intended use are recorded as the cost of the asset. $4.5 million + $500,000 = $5 million.

When originally purchased, a vehicle had an estimated useful life of 8 years. The vehicle cost $43,000 and its estimated residual value is $3,000. After 3 years of straight-line depreciation, the asset's total estimated useful life was revised from 8 years to 4 years and there was no change in the estimated residual value. The depreciation expense in year 4 is

When originally purchased, a vehicle had an estimated useful life of 8 years. The vehicle cost $43,000 and its estimated residual value is $3,000. After 3 years of straight-line depreciation, the asset's total estimated useful life was revised from 8 years to 4 years and there was no change in the estimated residual value. The depreciation expense in year 4 is (Round your final answer to the nearest whole number.)

	$9,725
	$10,000
	$6,525
→	$25,000

Explanation  The amount of depreciable cost as of the end of year 3 is: $43,000 − $3,000 − ($40,000 / 8 × 3) = $25,000. The remaining depreciation will be recorded over the remaining 1-year useful life: $25,000 / 1 = $25,000

The following merchandise transactions occurred during December for two different companies: Rippen and Burnen. Both companies use a perpetual inventory system. On December 3, Rippen Corporation sold merchandise on account to Burnen Corp. for $487,000, terms 3/10, n/30. This merchandise originally cost Rippen $308,000.

The following merchandise transactions occurred during December for two different companies: Rippen and Burnen. Both companies use a perpetual inventory system. On December 3, Rippen Corporation sold merchandise on account to Burnen Corp. for $487,000, terms 3/10, n/30. This merchandise originally cost Rippen $308,000. On December 8, Burnen Corp. returned merchandise to Rippen Corporation for a credit of $3,300. Rippen returned this merchandise to inventory at its original cost of $2,087. December 12, Burnen Corp. paid Rippen Corporation for the amount owed.

 

Required:

(a)	Prepare the journal entries to record these transactions on the books of Rippen Corporation. (Omit the "$" sign in your response.)

 

Date	General Journal	Debit	Credit
Dec. 3	Accounts receivable
	Sales revenue
	Cost of goods sold
	Inventory
Dec. 8	Sales returns & allowances
	Accounts receivable
	Inventory
	Cost of goods sold
Dec. 12	Cash
	Sales discounts
	Accounts receivable

(b)	What is the amount of net sales to be reported on Rippen Corporation's income statement? (Omit the "$" sign in your response.)

 

Net sales

$

(c)	What is the Rippen Corporation's gross profit percentage? (Do not round intermediate calculations and round your final answer to 2 decimal places. Omit the "%" sign in your response.)

 

Gross profit

%

Explanation:

(b)

Sales Revenue – Sales returns & allowances – Sales discounts = Net Sales

$487,000 – $3,300 – $14,511 = $469,189

(c)

Net sales – Cost of goods sold = Gross profit

$469,189 – $305,913 = $163,276

Gross profit/Net sales = Gross profit %

$163,276 / $469,189 = 34.80% (rounded)