Question

Hi, I need help answering the following question. I have attached the balance sheet below.

1. Identify a reason why Inventory has changed over time? Is this a good or bad thing?

4. Which depreciation method does Witness Fitness use? How can you tell? [2 marks]

   1. Declining method

   2. Double declining method

   3. Moving average cost

   4. Straight Line

   5. FIFO

4. Which inventory costing method would you recommend WitFit to use? Why?

   1. Declining method [2 marks]

2. Double declining method

3. Moving average cost

4. Straight line

5. FIFO

Thank You!

ASSET 14,998.50 100.00 15,098.50 Current Assets Bank Bank:Petty Cash Bank:Net Accounts Receivable Allowance for Doubtful Accounts Net Accounts Receivable Prepaid Insurance Supplies Total Current Assets 8,920.68 -916.00 LIABILITY 8,004.68 3,870.00 816.21 27,789.39 Current Liabilities Accounts Payable Bank Loan Payable C.P.P. Payable E.I. Payable Employees' Income Tax Payable HST Payable Total Current Liabilities 20,292.78 95,000.00 1,385.58 653.79 2,030.27 - 192.83 119,169.59 Inventory Assets Merchandise Inventory Total Inventory Assets 25,099.23 25,099.23 TOTAL LIABILITY 119,169.59 107,393.68 -10,600.00 EQUITY 96,793.68 Capital Assets Fitness Equipment Acc. Dep./Fitness Equipment Net Fitness Equipment Furniture and Equipment Acc. Dep./Furn. & Equipment Net Furniture and Equipment Store Equipment Acc. Dep./Store Equipment Net Store Equipment Total Capital Assets 14,720.88 -2.700.00 12.020.88 Equities Common Stock Retained Earnings Current Earnings Total Equities 75,000.00 -9,490.05 - 12,655.63 52,854.32 12,570.73 -2.250.00 10,320.73 119.135.29 TOTAL EQUITY 52,854.32 TOTAL ASSET 172.023.91 LIABILITIES AND EQUITY 172,023.91

Answer 1

Subject Date:_ MON TUE WED THR FRI SAT SUN Solution to be changes follows In (1 (ii) (iii) (v) There are lot of reasons mnentory some of are as Due to sales made i Purchase of Inventories. Barter of inventories hoss or damage or wastage to inventory In this situation there were Supplees made due to which mientries changing over the years. changes in supplies may be a good thing or bad thing its depends because only changing on inventory through buying it is never be a good thing it is equally neccessory to sale out the nventory to sustain into business, fitness use withess the moving average cost method. because the changes In depreciation not looking like the same in different years and it is possibles that depreciation is charged through moving average cost method. According to my knowledge it is always better to use moving average cost method, because it shows real coverage cost of product, it does not be like using only one rate of cost according to Input and output of inventory