Week Three 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 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. Cash $35,000 Sales $35,000 Woods goods 11,000 Woods Inventory 11,000 Moon Goods 4,000 Moon Inventory 4,000…show more content…
Double-declining-balance 20% * 2 = 40% $30,000 * 40% = $12,000 30,000-12,000 =18,000*40% = $7,200 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: a. The machine’s book value on December 31, 20X5, assuming use of the straight-line depreciation method Cost $1,000 – Residual Value $100 / Estimated Service 4 = $225 depreciation Book Value on 12/31/X5 = $1000 – 675 which is the3 years that have lapsed = $325 book value as of 12/31/X5 b. Depreciation expense for 20X4, assuming use of the units-of-output depreciation method. Actual washing cycles in 20X4 totaled 500. 20X4 depreciation expense. Cost $1,000 – Residual Value $100/Washing cycles 1,800 = $0.50 Cycles 500 *$0.50 = $250 depreciation expense c. Accumulated depreciation on December 31, 20X5, assuming use of the double-declining-balance depreciation method. Double Declining Balance 50% SL is ¼ = 25% $1000 * 50% = $500 $500 * 50% = $250 depreciation expense $250 * 50% = $125 depreciation expense Accumulated depreciation on 12/31/X5 is $500+$250+$125 = $875 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

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