Anda di halaman 1dari 3

Mya Walker

Final Exam

1. SuperDuper Company sells top-of-the-line skateboards. SuperDuper is concerned about


maintaining high earnings and has chosen to use the periodic FIFO method of inventory costing. At the
beginning
of the year, SuperDuper had 5,000 skateboards in inventory, each costing $20. In April, SuperDuper
purchased 2,000 skateboards at a cost of $22 and in August, purchased 4,000 more at a cost of $23.
During the year, SuperDuper sold 9,000 skateboards for $40 each.

a. Record each purchase SuperDuper made

Beginning Inventory 5,000 units @ $20 = $100,000

Purchase 2,000 units @ $22 = 44,000

Purchase 4,000 units @ $23 = 92,000

Cost of Goods Available for Sale 11,000 $236,000

Units sold 9,000

b. Determine SuperDuper’s cost of goods sold using FIFO.

FIFO Cost of goods sold

5000 * 20 100,000

2,000 * 22 44,000

2,000 * 23 46,000

9,000 $190,000

2. Assume the same facts as problem 1 above, except that SuperDuper is more concerned with
minimizing taxes and uses LIFO. Determine SuperDuper’s Cost of Goods Sold using LIFO.

LIFO Cost of goods sold

4,000 * 23 92,000

2,000 * 22 44,000

3,000 * 20 60,000

9,000 $196,000
Mya Walker
Final Exam

4. Using your answers to problems 1–3, determine the following:


a. Which of the methods yields the lowest cost of goods sold for SuperDuper?
FIFO
b. Which of the methods yields the highest ending inventory for SuperDuper?

FIFO

1. Springfield Corporation purchases a new machine on March 3, 20X4 for $35,600 in cash. It pays

an additional $3,400 to transport and set up the machine. Springfield’s accountant determines that

the equipment has no residual value and that the useful life is five years. It is expected to generate

2,400,000 units during its life. Assume Springfield employs the half-year convention.

a. Record the purchase of the machine.

Date Account Title Debit Credit

Mar 3 20x4 Machine 39000

Cash 39000

b. Assume that Springfield uses the straight-line method of depreciation. Record depreciation

expense for the first two years of the machine’s life.

Depreciation Expense = $39,000/5 years

Depreciation Expense = $7,800 per year

20X4: Take 1/2 of first year due to half year convention = $3,900

20X5: expense = $7,800

c. Assume that Springfield uses the double-declining balance method of depreciation. Record

depreciation expense for the first two years of the machine’s life.

Straight line rate = 1/5

Double declining rate = 2/5


Mya Walker
Final Exam

20X4 Depreciation Expense = $39,000 × 2/5 × 1/2 = $7,800

20X5 Depreciation Expense = ($39,000 − $7,800) × 2/5 = $12,480

d. Assume that Springfield uses the units-of-production method of depreciation. During Year 1,

the machine produces 600,000 units. During Year 2, the machine produces 578,000 units.

Record depreciation expense for the first two years of the machine’s life.

Depreciation Rate = $39,000/2,400,000 units

Depreciation Rate = 0.01625 per unit

20X4 Depreciation Expense = 600,000 units × 0.01625

20X4 Depreciation Expense = $9,750

(no need to adjust for half year since expense is based on usage rather than time)

20X5 Depreciation Expense = 578,000 units × 0.01625

20X5 Depreciation Expense = $9,393

Anda mungkin juga menyukai