Question

1. Periodic inventory by three methods; cost of goods sold

The units of an item available for sale during the year were as follows:

Jan. 1	Inventory	50 units at $98
Mar. 10	Purchase	70 units at $110
Aug. 30	Purchase	10 units at $118
Dec. 12	Purchase	70 units at $120

There are 80 units of the item in the physical inventory at December 31. The periodic inventory system is used.

Determine the ending inventory cost and the cost of goods sold by three methods. Round interim calculations to one decimal and final answers to the nearest whole dollar.

Cost of Ending Inventory and Cost of Goods Sold
Inventory Method	Ending Inventory	Cost of Goods Sold
First-in, first-out (FIFO)	$	$
Last-in, first-out (LIFO)
Weighted average cost

2.

Entries for Notes Receivable, Including Year-End Entries

The following selected transactions were completed by Interlocking Devices Co., a supplier of zippers for clothing:

20Y7
Dec. 7.	Received from Unitarian Clothing and Bags Co., on account, a $54,000, 60-day, 10% note dated December 7.
Dec. 31.	Recorded an adjusting entry for accrued interest on the note of December 7.
Dec. 31.	Recorded the closing entry for interest revenue.
20Y8
Feb. 5.	Received payment of note and interest from Unitarian Clothing & Bags Co.

Journalize the entries to record the transactions. Assume 360 days in a year. If an amount box does not require an entry, leave it blank. Assume February has 28 days in 2018 If required, round the interest to the nearest cent.

20Y7, Dec. 7
Dec. 31
Dec. 31
20Y8, Feb. 5

3.

Comparing three depreciation methods

Dexter Industries purchased packaging equipment on January 8 for $72,000. The equipment was expected to have a useful life of three years, or 18,000 operating hours, and a residual value of $3,600. The equipment was used for 7,200 hours during Year 1, 5,400 hours in Year 2, and 5,400 hours in Year 3.

Required:

1. Determine the amount of depreciation expense for the three years ending December 31, by (a) the straight-line method, (b) the units-of-activity method, and (c) the double-declining-balance method. Also determine the total depreciation expense for the three years by each method. Round the final answers for each year to the nearest whole dollar.

Depreciation Expense
Year	Straight-Line Method			Units-of-Activity Method			Double-Declining-Balance Method
Year 1		$			$			$
Year 2		$			$			$
Year 3		$			$			$
Total		$			$			$

2. What method yields the highest depreciation expense for Year 1?

3. What method yields the most depreciation over the three-year life of the equipment?

Answer 1

1 FIFO LIFO Ending inventary cous. $12600 $9560 Cso X984 Toxu10) (10X1184 701120) $9580 $12600 (10X12+ 20X120) C50x984 70815) $13308 $8872 ( 522130x120) { $22120x80 | WAC 200 Dect. Note Recienable $54000 Unitalian Clothing $S4000 Acceued Interest $360 Intesest Revenue $360 Decal

Tebs Acenied Intexst & suo Interest devenue. $540 Eash $54900 Note Recievable Accrued antexst $54000 $900 13 yoz Y22 Depecuation expense. Spaight line method. $24000 $32000/3) $24000 983 - $24000 & Jon 13 SUNDAY

mity method 22000 x 72002 $28800 TB000 72000 x 5400 - $21600 18000 A 43 72000 x 340 2 $21600. L8000 $ 32000 - Double declining method. You 402000 x 2 - $48000 U $7000 - $48000 4 = $16000 . 2. 33 $22000 - $64000 x2 < $5333. 3 & 69333

(2) Double declining yielo - highest depreciation in Yog B) Staight line & VOP method