1. A machine acquired on January 4, 2009, at a cost of $425,000, has an estimated useful life of nine years and an estimated residual value of $65,000. (10 points)

1. What was the amount of depreciation for the years 2009, 2010, and 2011, using the straight-line method of depreciation?

2. What was the book value of the machine on January 1, 2012?  

3. Assume that the machine was sold on January 9, 2012, for $290,000 journalize the entry to record the sale                                                               

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4. Assume that the machine had been sold on January 9, for $310,000, journalize the entry to record the sale.

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The cost of materials transferred into the Filling Department of Eve Cosmetics Company is $19,900, including $5,400 from the Blending Department and $14,500 from the materials storeroom. The conversion cost for the period in the Filling Department is $6,440 ($1,440 factory overhead applied and $5,000 direct labor). The total cost transferred to Finished Goods for the period was $25,640. The Filling Department had a beginning inventory of $2,600.

Required:

Periodic Inventory by Three Methods; Cost of Merchandise Sold

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

There are 60 units of the item in the physical inventory at December 31. The periodic inventory system is used.

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

Ivanhoe Company purchased a new machine on October 1, 2017, at a cost of $ 87,800. The company estimated that the machine has a salvage value of $ 8,800. The machine is expected to be used for  64,200 working hours during its  8-year life.

Compute depreciation using the following methods in the year indicated.

Declining-balance using double the straight-line rate for 2017 and 2018. (Round answers to 0 decimal places, e.g. 125)

Calculate the depreciation cost per hour. (Round answer to 2 decimal places, e.g. $1.25)

Units-of-activity for 2017, assuming machine usage was  410 hours. (Round answer to 0 decimal places, e.g. 125)

What is the difference between FIFO, LIFO and Average Cost Method? What is the impact of FIFO, LIFO and Average cost method amongst income statements and balance sheets? What are the depreciation methods for PPE? What is the impact of each depreciation method on the income statement and balance sheet? What is the asset sale in regards to financial statement impact?

COST OF CAPITAL

With several new investment opportunities, it is necessary for you to first know AB Designs’ weighted average cost of capital (WACC). This critical information will inform your analysis on what investments are profitable along with identifying the best financing option.  

Business Problem:

AB Designs capital structure is composed of the following sources and target weights that represent the proportion of use for each. AB Designs tax rate is 40%.

Debt:

AB Designs has a long-term loan with North Shore bank, financed at a 10% interest rate.

AB Designs can sell a 20-year, $1,000 par value, 9 percent bond for $980. A flotation cost of 2 percent of the face value would be required in addition to the discount of $20.

Preferred Stock:

AB Designs has determined it can issue preferred stock at $65 per share par value. The stock will pay an $8.00 annual dividend. The cost of issuing and selling the stock is $3 per share.

Common Stock:

AB Design’s common stock is currently selling for $40 per share. The dividend expected to be paid at the end of the coming year is $5.07. Its dividend payments have been growing at a constant rate for the last five years. Five years ago, the dividend was $3.45. It is expected that to sell, a new common stock issue must be underpriced at $1 per share and the firm must pay $1 per share in flotation costs.    

Identify AB Designs’ WACC.  

Disposal of Fixed Asset

Equipment acquired on January 6 at a cost of $422,300, has an estimated useful life of 9 years and an estimated residual value of $55,100.

a. What was the annual amount of depreciation for the Years 1-3 using the straight-line method of depreciation?

Year

Depreciation Expense

Year 1

$

Year 2

$

Year 3

$

b. What was the book value of the equipment on January 1 of Year 4?

$

c. Assuming that the equipment was sold on January 3 of Year 4 for $284,900, journalize the entry to record the sale. If an amount box does not require an entry, leave it blank.

d. Assuming that the equipment had been sold on January 3 of Year 4 for $305,900 instead of $284,900, journalize the entry to record the sale. If an amount box does not require an entry, leave it blank.

let's say the Pentagon wants to know what the cost of the War in Iraq has been. It then wants to compare that to the cost of the War in Vietnam.

Do you think the U.S. government is more likely to use a costing system that is more closely aligned with Job Order Costing or one that is more closely aligned with Process Costing? Support your view.