Chapter Homework Essays

750 Words Jan 11th, 2015 3 Pages
Chapters 1 & 2 Homework
Complete the following exercises 1. Classify the accounts below (e.g. Assets, Liabilities or Stockholders’ Equity)

a. Accounts Payable Liability b. Preferred Stock Stockholder Equity c. Office Supplies Assets d. Accounts Receivable Assets e. Machinery Assets f. Notes Receivable Assets g. Cash Assets h. Mortgage Payable Liability i. Inventory Assets

2. Determine the missing amounts.

j. Assets $500,000
Stockholders’ Equity $150,000
Liabilities $350,000

k. Stockholders’ Equity $311,000
Liabilities $423,000
Assets $734,000

l. Assets at January 1, 2013 $950,000
Liabilities at January 1, 2013
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First-In, First-Out (FIFO) method
100 x 10 = 1000 50 x 14 = 700
200 x 11 = 2200 200 x 15 = 3000
300 x 12 = 3000 150 x 16 = 2400
250 x 13 = 3250
50 x 14 = 700 COGS $10,750 Inventory $6100

b. Last-In, Last-Out (LIFO) method
150 x 16 = 2400 100 x 12 = 1200
200 x 15 = 3000 200 x 11 = 2200
100 x 14 = 1400 100 x 10 = 1000
250 x 13 = 3250
200 x 12 = 2400
COGS $12,450 Inventory $4400

6. Forman, Inc. owns machinery with a cost of $250,000. Its estimated useful life is 10 years and a $30,000 salvage value.
Determine the depreciation expense for each of the 10 years of the asset’s life, assuming the company uses: r. Straight-line method
$220,000/10 = $22,000 per year

s. Double-Declining Balance method 1. $220,000 x 20% = $44,000 2. $176,000 x 20% = $35,200 3. $140,800 x 20% = $28,160 4. $112,640 x 20% = $22,528 5. $90,112 x 20% = $18,022.40 Revert to Straight line method for remaining 6. $72,089.60 = $14,417.92 7. $57,671.68 = $14,417.92 8. $43,253.76 = $14,417.92 9. $28,835.48 = $14,417.92 10. $14,417.92
$220,000

t. Sum of Year’s Digits method
1+2+3+4+5+6+7+8+9+10 = 55
$220,000x10/55 = $40,000
$220,000x9/55 = $36,000
$220,000x8/55 = $32,000
$220,000x7/55 = $28,000
$220,000x6/55 = $24,000…