Florida Atlantic University ?Computing Cost Flows Exam Practice

Problem 6-1APerpetual: Alternative cost flows P1

Warnerwoods Company uses a perpetual inventory system. It entered into the following purchases and sales transactions for March. (For specific identification, the March 9 sale consisted of 80 units from beginning inventory and 340 units from the March 5 purchase; the March 29 sale consisted of 40 units from the March 18 purchase and 120 units from the March 25 purchase.)

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Required

1. Compute cost of goods available for sale and the number of units available for sale.
2. Compute the number of units in ending inventory.
3. Compute the cost assigned to ending inventory using (a) FIFO, (b) LIFO, (c) weighted average, and (d) specific identification. (Round all amounts to cents.)

Check (3) Ending inventory: FIFO, $14,800; LIFO, $13,680; WA, $14,352

1. Compute gross profit earned by the company for each of the four costing methods in part 3.

Exercise 9-8 Aging of receivables method P3

Daley Company prepared the following aging of receivables analysis at December 31.

1. Estimate the balance of the Allowance for Doubtful Accounts using aging of accounts receivable.
2. Prepare the adjusting entry to record bad debts expense using the estimate from part a. Assume the unadjusted balance in the Allowance for Doubtful Accounts is a $3,600 credit.
3. Prepare the adjusting entry to record bad debts expense using the estimate from part a. Assume the unadjusted balance in the Allowance for Doubtful Accounts is a $100 debit.

Exercise 10-7 Straight-line depreciation P1

NewTech purchases computer equipment for $154,000 to use in operating activities for the next four years. It estimates the equipment’s salvage value at $25,000. Prepare a table showing depreciation and book value for each of the four years assuming straight-line depreciation.

Exercise 10-8 Double-declining-balance depreciation P1

NewTech purchases computer equipment for $154,000 to use in operating activities for the next four years. It estimates the equipment’s salvage value at $25,000. Prepare a table showing depreciation and book value for each of the four years assuming double-declining-balance depreciation.