ACC 205 Week Three Exercise Assignment Inventory

Inventory1. Specific identification method. Boston Galleries uses the specific identification method for inventory valuation. Inventory information for several oil paintings follows.  Painting  Cost1/2 Beginning inventoryWoods$11,0004/19 PurchaseSunset21,8006/7 PurchaseEarth31,20012/16 PurchaseMoon4,000Woods and Moon were sold during the year for a total of $35,000. Determine the firm’sa. 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  Cost1/15  700  $451/31  1200  $482/12  800  $462/27  650  $51Sales during the first quarter were.Date  Sold1/19  5002/2  6002/13  5002/28  100The White Company uses a perpetual inventory system.Using the White Company data, fill in the following chart to compare the results obtained under the FIFO, LIFO, and weighted-average inventory methods.FIFO  LIFOWeighted Average   Goods available for sale    $$$Ending inventory, March 31Cost of goods sold3. 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 = $1,500a. Prepare journal entries for the above purchases and sales.b. Calculate the balance in the firm’s Inventory account.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  @$1253/17:Sold 50 boards @ $2504/3:Purchase 200 boards  @$1355/17:Sold 75 boards @ $2506/3:Purchase 100 boards  @$1451/3:Purchase 100 boards  @$1553/17:Sold 300 boards @ $2501/3:Purchase 100 boards  @$140 Wave Riders uses a perpetual inventory system.Instructionsa. 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 b. 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 20X8b. Straight-linec. Double-declining-balance6. 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:a. The machine’s book value on December 31, 20X5, assuming use of the straight-line depreciation methodb. 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.Instructionsa. 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.