Final Exam
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.
4,000 * 23 92,000
2,000 * 22 44,000
3,000 * 20 60,000
9,000 $196,000
Mya Walker
Final Exam
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.
Cash 39000
b. Assume that Springfield uses the straight-line method of depreciation. Record depreciation
20X4: Take 1/2 of first year due to half year convention = $3,900
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.
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.
(no need to adjust for half year since expense is based on usage rather than time)