3 - 38Test Bank for Intermediate Accounting, Twelfth Edition

Stevens Co. bought a machine on January 1, 2006 for $875,000. It had a $75,000 estimated residual value and a ten-year life. An expense account was debited on the purchase date. Stevens uses straight-line depreciation. This was discovered in 2008. Prepare the entry or entries related to the machine for 2008.

Show how the following independent errors will affect net income on the Income Statement and the stockholders' equity section of the Balance Sheet using the symbol + (plus) for overstated, (minus) for understated, and 0 (zero) for no effect.20082009 IncomeBalanceIncomeBalanceStatement SheetStatement Sheet 1.Ending inventory in 2008 overstated.2.Failed to accrue 2008 interest reve-nue.3.A capital expenditure for factory equipment (useful life, 5 years) was erroneously charged to maintenance expense in 2008.4.Failed to count office supplies on hand at 12/31/08. Cash expenditures have been charged to an office supplies expense account during the year 2008.5.Failed to accrue 2008 wages.6.Ending inventory in 2008 understated.7.Overstated 2008 depreciation ex-pense; 2009 expense correct.

Redman Co. began operations on January 1, 2007. Financial statements for 2007 and 2008 contained the following errors: Dec. 31, 2007 Dec. 31, 2008Ending inventory$90,000 too high$114,000 too highDepreciation expense48,000 too lowAccumulated depreciation48,000 too low48,000 too lowInsurance expense42,000 too high42,000 too lowPrepaid insurance36,000 too low

In addition, on December 26, 2008 fully depreciated equipment was sold for $58,000, but the sale was not recorded until 2009. No corrections have been made for any of the errors. Ignoring income taxes, show your calculation of the total effect of the errors on 2008 net income.

Pack Company's net incomes for the past three years are presented below: 2009 2008 2007$480,000$450,000$360,000

During the 2009 year-end audit, the following items come to your attention:

1.Pack bought a truck on January 1, 2006 for $196,000 with a $16,000 estimated salvage value and a six-year life. The company debited an expense account and credited cash on the purchase date for the entire cost of the asset. (Straight-line method)

2.During 2009, Pack changed from the straight-line method of depreciating its cement plant to the double-declining balance method. The following computations present depreciation on both bases: 2009 2008 2007Straight-line36,00036,00036,000Double-declining46,08057,60072,000

The net income for 2009 was computed using the double-declining balance method, on the January 1, 2009 book value, over the useful life remaining at that time. The depreciation recorded in 2009 was $72,000.

3.Pack, in reviewing its provision for uncollectibles during 2009, has determined that 1% is the appropriate amount of bad debt expense to be charged to operations. The company had used 1/2 of 1% as its rate in 2008 and 2009 when the expense had been $18,000 and $12,000, respectively. The company recorded bad debt expense under the new rate for 2009. The company would have recorded $6,000 less of bad debt expense on December 31, 2009 under the old rate.

Instructions(a)Prepare in general journal form the entry necessary to correct the books for the transaction in part 1 of this problem, assuming that the books have not been closed for the current year.(b)Compute the net income to be reported each year 2007 through 2009.(c)Assume that the beginning retained earnings balance (unadjusted) for 2007 was $1,260,000. At what adjusted amount should this beginning retained earnings balance for 2007 be stated, assuming that comparative financial statements were prepared?(d)Assume that the beginning retained earnings balance (unadjusted) for 2009 is $1,800,000 and that non-comparative financial statements are prepared. At what adjusted amount should this beginning retained earnings balance be stated?

Unruh Company reported net incomes for a three-year period as follows:2006, $186,000;2007, $189,000;2008, $180,000.

In reviewing the accounts in 2009 after the books for the prior year have been closed, you find that the following errors have been made in summarizing activities: 2006 2007 2008Overstatement of ending inventory$42,000$51,000$24,000Understatement of accrued advertising expense6,60012,0007,200

Instructions(a)Determine corrected net incomes for 2006, 2007, and 2008.(b)Give the entry to bring the books of the company up to date in 2009, assuming that the books have been closed for 2008.

The controller for Grant Corporation is concerned about certain business transactions that the company experienced during 2008. The controller, after discussing these matters with various individuals, has come to you for advice. The transactions at issue are presented below.

1.The company has decided to switch from the direct write-off method in accounting for bad debt expense to the percentage-of-sales approach. Assume that Grant Corporation has recognized bad debt expense as the receivables have actually become uncollectible in the following way: 2007 2008From 2007 sales31,80012,000From 2008 sales45,000

The controller estimates that an additional $65,400 will be charged off in 2009: $11,400 applicable to 2007 sales and $54,000 to 2008 sales.2.Inventory has been shipped on consignment. These transactions have been recorded as ordinary sales and billed as such on account. At December 31, 2008, inventory billed and in the hands of consignees amounted to $400,000. The percentage markup on selling price is 20%. Assume that consigned inventory is sold the following year. The company uses the perpetual inventory system.

3.During the current year, the company sold $600,000 of goods on the installment basis. The cost of sales associated with these goods sold is $420,000. The company inadvertently handled these sales and related costs as part of the regular sales transactions. Cash of $172,000, including a down payment of $60,000, was collected on these installment sales during the current year. Due to questionable collectibility, the installment method was considered appropriate.

Instructions(a)Assume that Grant Corporation reported net income of $1,000,000 for 2008. Present a schedule showing the corrected net income after reviewing the above transactions.(b)Prepare the journal entries necessary at December 31, 2008, assuming that the books have been closed.

Present, in journal form, the adjustments that would be made on July 31, 2007, the end of the fiscal year, for each of the following. 1.The supplies inventory on August 1, 2006 was $7,350. Supplies costing $20,150 were acquired during the year and charged to the supplies inventory. A count on July 31, 2007 indicated supplies on hand of $8,810. 2.On April 30, a ten-month, 9% note for $20,000 was received from a customer.*3.On March 1, $12,000 was collected as rent for one year and a nominal account was credited.

Reed Co. wishes to enter receipts and payments in such a manner that adjustments at the end of the period will not require reversing entries at the beginning of the next period. Record the following transactions in the desired manner and give the adjusting entry on December 31, 2007. (Two entries for each part.)1.An insurance policy for two years was acquired on April 1, 2007 for $8,000.2.Rent of $12,000 for six months for a portion of the building was received on November 1, 2007.

The adjusted trial balance of Ryan Financial Planners appears below. Using the information from the adjusted trial balance, you are to prepare for the month ending December 31:

1.an income statement.2.a statement of retained earnings.3.a balance sheet.

RYAN FINANCIAL PLANNERSAdjusted Trial BalanceDecember 31, 2007DebitCreditCash $ 4,400Accounts Receivable2,200Office Supplies1,800Office Equipment15,000Accumulated DepreciationOffice Equipment$ 4,000Accounts Payable3,800Unearned Revenue5,000Common Stock10,000Retained Earnings4,400Dividends2,500Service Revenue3,700Office Supplies Expense600Depreciation Expense2,500Rent Expense 1,900______$30,900$30,900

Sales salaries paid during 2007 were $60,000. Advances to salesmen were $1,100 on January 1, 2007, and $800 on December 31, 2007. Sales salaries accrued were $1,360 on January 1, 2007, and $1,380 on December 31, 2007. Show the computation of sales salaries on an accrual basis for 2007.

The records for Todd Inc. showed the following for 2007: Jan. 1 Dec. 31Accrued expenses$1,800$2,150Prepaid expenses720870Cash paid during the year for expenses, $42,500Show the computation of the amount of expense that should be reported on the income statement.

The records for Kiley Company showed the following for 2007: Jan. 1 Dec. 31Unearned revenue$1,600$2,160Accrued revenue1,260920Cash collected during the year for revenue, $70,000

Show the computation of the amount of revenue that should be reported on the income statement.

Revenue on the income statement was $125,800. Accounts receivable were $4,500 on January 1 and $3,540 on December 31. Unearned revenue was $1,050 on January 1 and $1,670 on December 31.Show the computation of revenue for the year on a cash basis.

Selected amounts from Trent Company's trial balance of 12/31/07 appear below:1.Accounts Payable$160,0002.Accounts Receivable150,0003.Accumulated DepreciationEquipment200,0004.Allowance for Doubtful Accounts20,0005.Bonds Payable500,0006.Cash150,0007.Common Stock60,0008.Equipment840,0009.Insurance Expense30,00010.Interest Expense10,00011.Merchandise Inventory300,00012.Notes Payable (due 6/1/08)200,00013.Prepaid Rent150,00014.Retained Earnings818,00015.Salaries and Wages Expense328,000 (All of the above accounts have their standard or normal debit or credit balance.)

Part A.Prepare adjusting journal entries at year end, December 31, 2007, based on the following supplemental information.a.The equipment has a useful life of 15 years with no salvage value. (Straight-line method being used.)b.Interest accrued on the bonds payable is $15,000 as of 12/31/07.c.Expired insurance at 12/31/07 is $20,000.d.The rent payment of $150,000 covered the six months from November 30, 2007 through May 31, 2008.e.Salaries and wages earned but unpaid at 12/31/07, $22,000.

Part B.Indicate the proper balance sheet classification of each of the 15 numbered accounts in the 12/31/07 trial balance before adjustments by placing appropriate numbers after each of the following classifications. If the account title would appear on the income statement, do not put the number in any of the classifications.a.Current assetsb.Property, plant, and equipmentc.Current liabilitiesd.Long-term liabilitiese.Stockholders' equity

Data relating to the balances of various accounts affected by adjusting or closing entries appear below. (The entries which caused the changes in the balances are not given.) You are asked to supply the missing journal entries which would logically account for the changes in the account balances.

1.Interest receivable at 1/1/07 was $1,000. During 2007 cash received from debtors for interest on outstanding notes receivable amounted to $5,000. The 2007 income statement showed interest revenue in the amount of $5,400. You are to provide the missing adjusting entry that must have been made, assuming reversing entries are not made.

2.Unearned rent at 1/1/07 was $5,300 and at 12/31/07 was $8,000. The records indicate cash receipts from rental sources during 2007 amounted to $40,000, all of which was credited to the Unearned Rent Account. You are to prepare the missing adjusting entry.

3.Accumulated depreciationequipment at 1/1/07 was $230,000. At 12/31/07 the balance of the account was $270,000. During 2007, one piece of equipment was sold. The equipment had an original cost of $40,000 and was 3/4 depreciated when sold. You are to prepare the missing adjusting entry.

4.Allowance for doubtful accounts on 1/1/07 was $50,000. The balance in the allowance account on 12/31/07 after making the annual adjusting entry was $65,000 and during 2007 bad debts written off amounted to $30,000. You are to provide the missing adjusting entry.

5.Prepaid rent at 1/1/07 was $9,000. During 2007 rent payments of $120,000 were made and charged to "rent expense." The 2007 income statement shows as a general expense the item "rent expense" in the amount of $125,000. You are to prepare the missing adjusting entry that must have been made, assuming reversing entries are not made.

6.Retained earnings at 1/1/07 was $150,000 and at 12/31/07 it was $210,000. During 2007, cash dividends of $50,000 were paid and a stock dividend of $40,000 was issued. Both dividends were properly charged to retained earnings. You are to provide the missing closing entry.

The following trial balance was taken from the books of Fisk Corporation on December 31, 2007.Account Debit Credit Cash$ 12,000Accounts Receivable40,000Note Receivable7,000Allowance for Doubtful Accounts$ 1,800Merchandise Inventory44,000Prepaid Insurance4,800Furniture and Equipment125,000Accumulated Depreciation--F. & E.15,000Accounts Payable10,800Common Stock44,000Retained Earnings55,000Sales280,000Cost of Goods Sold111,000Salaries Expense50,000Rent Expense 12,800 Totals$406,600$406,600At year end, the following items have not yet been recorded. a.Insurance expired during the year, $2,000. b.Estimated bad debts, 1% of gross sales. c.Depreciation on furniture and equipment, 10% per year. d.Interest at 6% is receivable on the note for one full year.*e.Rent paid in advance at December 31, $5,400 (originally charged to expense). f.Accrued salaries at December 31, $5,800.Instructions(a)Prepare the necessary adjusting entries.(b)Prepare the necessary closing entries.

The following information is available for Renn Corporation's first year of operations:Payment for merchandise purchases$250,000Ending merchandise inventory110,000Accounts payable (balance at end of year)60,000Collections from customers210,000The balance in accounts payable relates only to merchandise purchases. All merchandise items were marked to sell at 40% above cost. What should be the ending balance in accounts receivable, assuming all accounts are deemed collectible?

Yates Company's records provide the following information concerning certain account balances and changes in these account balances during the current year. Transaction information is missing from each item below.

InstructionsPrepare the entry to record the missing information for each account. (Consider each inde-pendently.)1.Accounts Receivable: Jan. 1, balance $41,000, Dec. 31, balance $55,000, uncollectible accounts written off during the year, $6,000; accounts receivable collected during the year, $134,000. Prepare the entry to record sales.2.Allowance for Doubtful Accounts: Jan. 1, balance $4,000, Dec. 31, balance $7,500, uncollectible accounts written off during the year, $25,000. Prepare the entry to record bad debt expense.3.Accounts Payable: Jan. 1, balance $25,000, Dec. 31, balance $44,000, purchases on account for the year, $110,000. Prepare the entry to record payments on account.4.Interest Receivable: Jan. 1 accrued, $3,000, Dec. 31 accrued, $2,100, earned for the year, $30,000. Prepare the entry to record cash interest received.

Grier & Associates maintains its records on the cash basis. You have been engaged to convert its cash basis income statement to the accrual basis. The cash basis income statement, along with additional information, follows:

Grier & AssociatesIncome Statement (Cash Basis)For the Year Ended December 31, 2007

Cash receipts from customers$450,000Cash payments:Wages$150,000Taxes65,000Insurance40,000Interest 25,000 280,000Net income$170,000

Additional information: Balances at 12/31 2007 2006 Accounts receivable$50,000$30,000Wages payable10,00020,000Taxes payable14,00019,000Prepaid insurance8,0004,000Accumulated depreciation90,00075,000Interest payable3,0009,000

No plant assets were sold during 2007.

The trial balance of Winsor Corporation is reproduced on the following page. The information below is relevant to the preparation of adjusting entries needed to both properly match revenues and expenses for the period and reflect the proper balances in the real and nominal accounts. InstructionsAs the accountant for Winsor Corporation, you are to prepare adjusting entries based on the following data, entering the adjustments on the work sheet and completing the additional columns with respect to the income statement and balance sheet. Carefully key your adjustments and label all items. (Due to time constraints, an adjusted trial balance is not required.) Round all computations to the nearest dollar.(a)Winsor determined that one percent of sales will become uncollectible.(b)Depreciation is computed using the straight-line method, with an eight year life and $1,000 salvage value.(c)Salesmen are paid commissions of 10% of sales. Commissions on sales for the last week of December have not been paid.(d)The note was issued on October 1, bearing interest at 8%, due Feb. 1, 2008.(e)A physical inventory of supplies indicated $440 of supplies currently in stock.(f)Provisions of a lease contract specify payments must be made one month in advance, with monthly payments at $800/mo. This provision has been complied with as of Dec. 31, 2007.

Winsor CorporationWork SheetFor the Year Ended December 31, 2007

Trial Balance AdjustmentsIncome StatementBalance Sheet Accounts Dr. Cr. Dr. Cr. Dr. Cr.Dr. Cr. Cash 12,400Trading Sec. 4,050Accounts Rec. 50,000Allow. for D. A.420Mdse. Inventory 16,800Supplies 1,040Equipment 45,000Accum. Depr.-Eq. 9,500Accounts Payable 4,400Notes Payable 5,000Common Stock 40,000Ret. Earnings 34,690Cost of Goods Sold 225,520Office Salaries Exp. 20,800Sales Comm. Exp. 29,000Rent Expense 7,200Misc. Expense 2,200Sales 320,000 Totals414,010414,010

Multiple ChoiceCPA Adapted

68.Which of the following should be reported as a prior period adjustment?Change inChange fromEstimated LivesUnaccepted Principleof Depreciable Assetsto Accepted Principlea.YesYesb.NoYesc.YesNod.NoNo

69.On December 31, 2008, Ellworth, Inc. appropriately changed its inventory valuation method to FIFO cost from weighted-average cost for financial statement and income tax purposes. The change will result in a $1,500,000 increase in the beginning inventory at January 1, 2008. Assume a 30% income tax rate. The cumulative effect of this accounting change on beginning retained earnings isa.$0.b.$450,000.c.$1,050,000.d.$1,500,000.

70.On January 1, 2008, Bosco Corp. changed its inventory method to FIFO from LIFO for both financial and income tax reporting purposes. The change resulted in an $800,000 increase in the January 1, 2008 inventory. Assume that the income tax rate for all years is 30%. The cumulative effect of the accounting change should be reported by Bosco in its 2008a.retained earnings statement as a $560,000 addition to the beginning balance.b.income statement as a $560,000 cumulative effect of accounting change.c.retained earnings statement as an $800,000 addition to the beginning balance.d.income statement as an $800,000 cumulative effect of accounting change.

71.On January 1, 2005, Dent Co. purchased a machine for $792,000 and depreciated it by the straight-line method using an estimated useful life of eight years with no salvage value. On January 1, 2008, Dent determined that the machine had a useful life of six years from the date of acquisition and will have a salvage value of $72,000. An accounting change was made in 2008 to reflect these additional data. The accumulated depreciation for this machine should have a balance at December 31, 2008 ofa.$438,000.b.$462,000.c.$480,000.d.$528,000.

72.On January 1, 2005, Neer Co. purchased a patent for $595,000. The patent is being amortized over its remaining legal life of 15 years expiring on January 1, 2020. During 2008, Neer determined that the economic benefits of the patent would not last longer than ten years from the date of acquisition. What amount should be reported in the balance sheet for the patent, net of accumulated amortization, at December 31, 2008?a.$357,000b.$408,000c.$420,000d.$436,375

73.During 2007, a textbook written by Givens Co. personnel was sold to Grand Publishing, Inc., for royalties of 10% on sales. Royalties are receivable semiannually on March 31, for sales in July through December of the prior year, and on September 30, for sales in January through June of the same year. Royalty income of $108,000 was accrued at 12/31/07 for the period July-December 2007. Royalty income of $120,000 was received on 3/31/08, and $156,000 on 9/30/08. Givens learned from Grand that sales subject to royalty were estimated at $1,620,000 for the last half of 2008.In its income statement for 2008, Givens should report royalty income ata.$276,000.b.$288,000.c.$318,000.d.$330,000.

74.On January 1, 2007, Gregg Corp. acquired a machine at a cost of $500,000. It is to be depreciated on the straight-line method over a five-year period with no residual value. Because of a bookkeeping error, no depreciation was recognized in Gregg's 2007 financial statements. The oversight was discovered during the preparation of Gregg's 2008 financial statements. Depreciation expense on this machine for 2008 should bea.$0.b.$100,000.c.$125,000.d.$200,000.

75.On December 31, 2008, special insurance costs, incurred but unpaid, were not recorded. If these insurance costs were related to work in process, what is the effect of the omission on accrued liabilities and retained earnings in the December 31, 2008 balance sheet?Accrued LiabilitiesRetained Earningsa.No effectNo effectb.No effectOverstatedc.UnderstatedNo effectd.UnderstatedOverstated

76.Early, Inc. is a calendar-year corporation whose financial statements for 2007 and 2008 included errors as follows:YearEnding InventoryDepreciation Expense2007$162,000overstated$135,000overstated200854,000understated45,000understatedAssume that purchases were recorded correctly and that no correcting entries were made at December 31, 2007, or at December 31, 2008. Ignoring income taxes, by how much should Early's retained earnings be retroactively adjusted at January 1, 2009?a.$144,000 increaseb.$36,000 increasec.$18,000 decreased.$9,000 increase

Multiple ChoiceCPA Adapted

85.On September 1, 2006, Lowe Co. issued a note payable to National Bank in the amount of $600,000, bearing interest at 12%, and payable in three equal annual principal payments of $200,000. On this date, the bank's prime rate was 11%. The first payment for interest and principal was made on September 1, 2007. At December 31, 2007, Lowe should record accrued interest payable ofa.$24,000.b.$22,000.c.$16,000.d.$14,667.

86.Eaton Co. sells major household appliance service contracts for cash. The service contracts are for a one-year, two-year, or three-year period. Cash receipts from contracts are credited to Unearned Service Revenues. This account had a balance of $1,800,000 at December 31, 2007 before year-end adjustment. Service contract costs are charged as incurred to the Service Contract Expense account, which had a balance of $450,000 at December 31, 2007.Service contracts still outstanding at December 31, 2007 expire as follows:During 2008$380,000During 2009570,000During 2010350,000What amount should be reported as Unearned Service Revenues in Eaton's December 31, 2007 balance sheet?a.$1,350,000.b.$1,300,000.c.$850,000.d.$500,000.

87.In November and December 2007, Lane Co., a newly organized magazine publisher, received $90,000 for 1,000 three-year subscriptions at $30 per year, starting with the January 2008 issue. Lane included the entire $90,000 in its 2007 income tax return. What amount should Lane report in its 2007 income statement for subscriptions revenue?a.$0.b.$5,000.c.$30,000.d.$90,000.

88.On June 1, 2007, Nott Corp. loaned Horn $400,000 on a 12% note, payable in five annual installments of $80,000 beginning January 2, 2008. In connection with this loan, Horn was required to deposit $5,000 in a noninterest-bearing escrow account. The amount held in escrow is to be returned to Horn after all principal and interest payments have been made. Interest on the note is payable on the first day of each month beginning July 1, 2007. Horn made timely payments through November 1, 2007. On January 2, 2008, Nott received payment of the first principal installment plus all interest due. At December 31, 2007, Nott's interest receivable on the loan to Horn should bea.$0.b.$4,000.c.$8,000.d.$12,000.

89.Allen Corp.'s liability account balances at June 30, 2007 included a 10% note payable in the amount of $2,400,000. The note is dated October 1, 2005 and is payable in three equal annual payments of $800,000 plus interest. The first interest and principal payment was made on October 1, 2006. In Allen's June 30, 2007 balance sheet, what amount should be reported as accrued interest payable for this note?a.$180,000.b.$120,000.c.$60,000.d.$40,000.

90.Colaw Co. pays all salaried employees on a biweekly basis. Overtime pay, however, is paid in the next biweekly period. Colaw accrues salaries expense only at its December 31 year end. Data relating to salaries earned in December 2007 are as follows:Last payroll was paid on 12/26/07, for the 2-week period ended 12/26/07.Overtime pay earned in the 2-week period ended 12/26/07 was $10,000.Remaining work days in 2007 were December 29, 30, 31, on which days there was no overtime.The recurring biweekly salaries total $180,000.Assuming a five-day work week, Colaw should record a liability at December 31, 2007 for accrued salaries ofa.$54,000.b.$64,000.c.$108,000.d.$118,000.

91.Tolan Corp.'s trademark was licensed to Eddy Co. for royalties of 15% of sales of the trademarked items. Royalties are payable semiannually on March 15 for sales in July through December of the prior year, and on September 15 for sales in January through June of the same year. Tolan received the following royalties from Eddy:March 15September 152006$5,000$7,50020076,0008,500Eddy estimated that sales of the trademarked items would total $40,000 for July through December 2007. In Tolan's 2007 income statement, the royalty revenue should bea.$14,500.b.$16,000.c.$20,500.d.$22,000.

92.At December 31, 2007, Sues Boutique had 1,000 gift certificates outstanding, which had been sold to customers during 2007 for $50 each. Sues operates on a gross margin of 60% of its sales. What amount of revenue pertaining to the 1,000 outstanding gift certificates should be deferred at December 31, 2007?a.$0.b.$20,000.c.$30,000.d.$50,000.

*93.Compared to the accrual basis of accounting, the cash basis of accounting overstates income by the net increase during the accounting period of theAccounts ReceivableAccrued Expenses Payablea.NoNob.NoYesc.YesNod.YesYes

*94.Gregg Corp. reported revenue of $1,100,000 in its accrual basis income statement for the year ended June 30, 2007. Additional information was as follows:Accounts receivable June 30, 2006$350,000Accounts receivable June 30, 2007530,000Uncollectible accounts written off during the fiscal year13,000Under the cash basis, Gregg should report revenue ofa.$687,000.b.$700,000.c.$907,000.d.$933,000.

*95.Jim Yount, M.D., keeps his accounting records on the cash basis. During 2007, Dr. Yount collected $360,000 from his patients. At December 31, 2006, Dr. Yount had accounts receivable of $50,000. At December 31, 2007, Dr. Yount had accounts receivable of $70,000 and unearned revenue of $10,000. On the accrual basis, how much was Dr. Yount's patient service revenue for 2007?a.$310,000.b.$370,000.c.$380,000.d.$390,000.

*96.The following information is available for Ace Company for 2007:Disbursements for purchases$1,050,000Increase in trade accounts payable75,000Decrease in merchandise inventory30,000Costs of goods sold for 2007 wasa.$1,155,000.b.$1,095,000.c.$1,005,000.d.$945,000.