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Calculate the balance in the firm’s Inventory account.
• Inventory Balance $2000 (purchased) - $1200 (sales) - $300 (returns) = $500
c) Absence of a purchases account is due to purchases, purchase returns and allowances, sales and sales returns are recognized in the inventory account balance. Perpetual inventory systems show all changes in inventory in the “inventory” account. Purchase accounts are not used in the perpetual inventory system. This is to keep the inventory balance current at all times.
4. Inventory valuation methods: computations and concepts. Wave Riders Surfboard Company began business on January 1 of the current year. Purchases of surfboards were as follows: 1/3: 100 boards @ $125
3/17: 50 boards @ $130
5/9: 246 boards @140
7/3: 400 boards @ $150
10/23: 74 boards @ $160
Wave Riders sold 710 boards at an average price of $250 per board. The company uses a periodic inventory system.
Instructions
a. Calculate cost of goods sold, ending inventory, and gross profit under each of the following inventory valuation methods:
• First-in, …show more content…
31 20x4 0.50 500 250 750 250
Dec. 31 20x5 0.50 250 125 875 125
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.
Summary = Annual depreciation = $9000
Year Straight Line UOP DDB
20x3 9000 9180 20000
20x4 9000 8640 12000
20x5 9000 5760 7200
20x6 9000 10800 4320
20x7 9000 10620 1480
Straight Line Method
Year Depreciation Expense Accumulated Dep Book
• Inventory Balance $2000 (purchased) - $1200 (sales) - $300 (returns) = $500
c) Absence of a purchases account is due to purchases, purchase returns and allowances, sales and sales returns are recognized in the inventory account balance. Perpetual inventory systems show all changes in inventory in the “inventory” account. Purchase accounts are not used in the perpetual inventory system. This is to keep the inventory balance current at all times.
4. Inventory valuation methods: computations and concepts. Wave Riders Surfboard Company began business on January 1 of the current year. Purchases of surfboards were as follows: 1/3: 100 boards @ $125
3/17: 50 boards @ $130
5/9: 246 boards @140
7/3: 400 boards @ $150
10/23: 74 boards @ $160
Wave Riders sold 710 boards at an average price of $250 per board. The company uses a periodic inventory system.
Instructions
a. Calculate cost of goods sold, ending inventory, and gross profit under each of the following inventory valuation methods:
• First-in, …show more content…
31 20x4 0.50 500 250 750 250
Dec. 31 20x5 0.50 250 125 875 125
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.
Summary = Annual depreciation = $9000
Year Straight Line UOP DDB
20x3 9000 9180 20000
20x4 9000 8640 12000
20x5 9000 5760 7200
20x6 9000 10800 4320
20x7 9000 10620 1480
Straight Line Method
Year Depreciation Expense Accumulated Dep Book