Acc205 Week3 Inventory

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    Week Three Exercise Assignment

    Inventory

    1. Specific identification method. Boston Galleries uses the specific identification method for inventory valuation. Inventory information for several oil paintings follows.

                                            Painting

                         Cost

    1/2 Beginning inventory

    Woods

    $11,000

    4/19 Purchase

    Sunset

    21,800

    6/7 Purchase

    Earth

    31,200

    12/16 Purchase

    Moon

    4,000

     

     

     

     

     

    Woods and Moon were sold during the year for a total of $35,000. Determine the firm’s

    a. cost of goods sold.

    b. gross profit.

    c. ending inventory.

    2. Inventory valuation methods: basic computations. The January beginning inven­tory of the White Company consisted of 300 units costing $40 each. During the first quarter, purchases were:

    Date                       Quantity                Cost

    1/15                        700                         $45

    1/31                        1200                       $48

    2/12                        800                         $46

    2/27                        650                         $51

    Sales during the first quarter were.

    Date                       Sold

    1/19                        500

    2/2                          600

    2/13                        500

    2/28                        100

     

     The White Company uses a perpetual inventory system

     

    3. Perpetual inventory system: journal entries. At the beginning of 20X3, Beehler Company implemented a computerized perpetual inventory system. The following transactions occurred:

    ·        Purchases on account: 500 units @ $4 =  $2,000

    ·        Sales on account: 300 units @ $5 = $1,500

    ·        Purchases on account: 600 units @ $5 =  $3,000

    ·        Sales on account: 300 units @ $5 = $1,500

    a. Prepare journal entries for the above purchases and sales

    4. Inventory valuation methods: computations and concepts. Wave Riders Surfboard Company began business on January 1 of the current year. Below are the transactions for the year

    :

    1/3:

    Purchase 100 boards  @ $125

    3/17:

    Sold 50 boards @ $250

    4/3:

    Purchase 200 boards  @ $135

    5/17:

    Sold 75 boards @ $250

    6/3:

    Purchase 100 boards  @ $145

    1/3:

    Purchase 100 boards  @ $155

    3/17:

    Sold 300 boards @ $250

    1/3:

    Purchase 100 boards  @ $140

     

    Wave Riders uses a perpetual inventory system.

     

    Instructions

    a. Calculate cost of goods sold, ending inventory, and gross profit under each of the following inventory valuation methods:

    ·               First-in, first-out      

    ·               Last-in, first-out

    ·               Weighted average

    Which of the three methods would be chosen if management’s goal is to

    (1) produce an up-to-date inventory valuation on the balance sheet?

    (2) approximate the physical flow of a sand and gravel dealer?

    5. Depreciation methods. Betsy Ross Enterprises purchased a delivery van for $30,000 in January 20X7. The van was estimated to have a service life of 5 years and a resid­ual value of $6,000. The company is planning to drive the van 20,000 miles annually. Compute depreciation expense for 20X8 by using each of the following methods:

    a. Units-of-output, assuming 17,000 miles were driven during 20X8

     

    6. Depreciation computations. Alpha Alpha Alpha, a college fraternity, purchased a new heavy-duty washing machine on January 1, 20X3. The machine, which cost $1,000, had an estimated residual value of $100 and an estimated service life of 4 years (1,800 washing cycles). Calculate the following:

    b. Depreciation expense for 20X4, assuming use of the units-of-output depreciation method. Actual washing cycles in 20X4 totaled 500.

    c. Accumulated depreciation on December 31, 20X5, assuming use of the double-declining-balance depreciation method.

    7. Depreciation computations: change in estimate. Aussie Imports purchased a specialized piece of machinery for $50,000 on January 1, 20X3. At the time of acquisition, the machine was estimated to have a service life of 5 years (25,000 operating hours) and a residual value of $5,000. During the 5 years of operations (20X3 – 20X7), the machine was used for 5,100, 4,800, 3,200, 6,000, and 5,900 hours, respectively.

    Instructions

    a. Compute depreciation for 20X3 – 20X7 by using the following methods: straight line, units of output, and double-declining-balance.

    b. On January 1, 20X5, management shortened the remaining service life of the machine to 20 months. Assuming use of the straight-line method, compute the company’s depreciation expense for 20X5.

    c. Briefly describe what you would have done differently in part (a) if Aussie Imports had paid $47,800 for the machinery rather than $50,000 In addition, assume that the company incurred $800 of freight charges $1,400 for machine setup and testing, and $300 for insurance during the first year of use.

     

     

     

     

     

     

     

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        Week Three Exercise Assignment

        Inventory

        1. Specific identification method. Boston Galleries uses the specific identification method for inventory valuation. Inventory information for several oil …

        class=css-1j18aoo9 years ago

      • ACC 205 Week 3 Exercise Assignment Inventory

        ACC 205 Week 3 Exercise Assignment

        1. Specific identification method. Boston Galleries uses the specific identification method for inventory valuation. Inventory information for …

        class=css-1j18aoo9 years ago

      • 1. Specific identification method. Boston Galleries uses the specific identification method for inventory valuation.

        ACC 205 Week 3 Exercise Assignment

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        Week Three Exercise Assignment

        Inventory

        1. Specific identification method. Boston Galleries uses the specific identification method for inventory valuation. Inventory information for several oil …

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