In: Accounting
1a. Depot Company had 10 tons of sand in inventory on January 1, 2017 valued at $70 per ton. On February 1, 2017 it acquired 20 tons valued at $80 per ton and an additional 30 tons at $100 a tons on March 1, 2018. On June 1 it made its only sale of sand for the year amounting to 40 tons.
What was the ending inventory and cost of goods sold value for the sand that should be recorded in 2017 using the average cost, FIFO and LIFO methods?
1b. Depot Company acquired a bulldozer for $40,000 on January 1, 2017. Additional ordinary and necessary costs to install the bulldozer for service include: $600 sales tax; $400 delivery charge. The bulldozer has an estimated useful life of 10 years and a salvage value of $1,000.
What entry would Depot make to record depreciation expense on December31, 2017 using the straight line and the double declining depreciation methods?
Ending Inventory |
|
FIFO |
$ 2,000.00 |
LIFO |
$ 1,500.00 |
Average |
$ 1,766.67 |
--Working
FIFO |
Cost of Goods available for sale |
Cost of Goods Sold |
Ending Inventory |
||||||
Units |
Cost/unit |
COG for sale |
Units sold |
Cost/unit |
COGS |
Units |
Cost/unit |
Ending inventory |
|
Beginning Inventory |
10 |
$ 70.00 |
$ 700.00 |
10 |
$ 70.00 |
$ 700.00 |
0 |
$ 70.00 |
$ - |
Purchases: |
|||||||||
01-Feb |
20 |
$ 80.00 |
$ 1,600.00 |
20 |
$ 80.00 |
$ 1,600.00 |
0 |
$ 80.00 |
$ - |
01-Mar |
30 |
$ 100.00 |
$ 3,000.00 |
10 |
$ 100.00 |
$ 1,000.00 |
20 |
$ 100.00 |
$ 2,000.00 |
TOTAL |
60 |
$ 5,300.00 |
40 |
$ 3,300.00 |
20 |
$ 2,000.00 |
LIFO |
Cost of Goods available for sale |
Cost of Goods Sold |
Ending Inventory |
||||||
Units |
Cost/unit |
COG for sale |
Units sold |
Cost/unit |
COGS |
Units |
Cost/unit |
Ending inventory |
|
Beginning Inventory |
10 |
$ 70.00 |
$ 700.00 |
0 |
$ 70.00 |
$ - |
10 |
$ 70.00 |
$ 700.00 |
Purchases: |
0 |
$ - |
$ - |
||||||
01-Feb |
20 |
$ 80.00 |
$ 1,600.00 |
10 |
$ 80.00 |
$ 800.00 |
10 |
$ 80.00 |
$ 800.00 |
01-Mar |
30 |
$ 100.00 |
$ 3,000.00 |
30 |
$ 100.00 |
$ 3,000.00 |
0 |
$ 100.00 |
$ - |
TOTAL |
60 |
$ 5,300.00 |
40 |
$ 3,800.00 |
20 |
$ 1,500.00 |
Weighted Average (Periodic) |
Units |
Cost per unit |
Total |
Beginning Inventory |
10 |
$ 70.00 |
$ 700.00 |
Purchases: |
|||
01-Feb |
20 |
$ 80.00 |
$ 1,600.00 |
01-Mar |
30 |
$ 100.00 |
$ 3,000.00 |
16-Apr |
0 |
$ - |
$ - |
28-Apr |
0 |
$ - |
$ - |
Total Purchases |
50 |
$ 4,600.00 |
|
Goods Available for Sales |
60 |
$ 5,300.00 |
|
Weighted Average cost per unit |
$ 88.33 |
||
Cost of Goods Sold |
40 |
$ 88.33 |
$ 3,533.33 |
Ending Inventory |
20 |
$ 88.33 |
$ 1,766.67 |
--Straight Line Method
Date |
Accounts title |
Debit |
Credit |
31-Dec 17 |
Depreciation expense - Equipment |
$ 4,000 |
|
Accumulated Depreciation - Equipment |
$ 4,000 |
||
(depreciation expense recorded) |
---Double declining balance method
Date |
Accounts title |
Debit |
Credit |
31-Dec 17 |
Depreciation expense - Equipment |
$ 6,150 |
|
Accumulated Depreciation - Equipment |
$ 6,150 |
||
(depreciation expense recorded) |
--Working
Straight Line
A |
Cost |
$ 41,000.00 |
B |
Residual Value |
$ 1,000.00 |
C=A - B |
Depreciable base |
$ 40,000.00 |
D |
Life [in years] |
10 |
E=C/D |
Annual SLM depreciation |
$ 4,000.00 |
Double declining
A |
Cost |
$ 41,000.00 |
B |
Residual Value |
$ 10,000.00 |
C=A - B |
Depreciable base |
$ 31,000.00 |
D |
Life [in years] |
10 |
E=C/D |
Annual SLM depreciation |
$ 3,100.00 |
F=E/C |
SLM Rate |
10.00% |
G=F x 2 |
DDB Rate |
20.00% |
Year |
Beginning Book Value |
Depreciation rate |
Depreciation expense |
1 |
$ 41,000.00 |
20.00% |
$ 6,150.00 |