1. On 1/1/23 Meganco purchased a new lathe for $40,000 installed. The physical life of the lathe is 10 years with a salvage value of $5,000 at the end of that time period. The lathe was purchase for a contract that will provide revenue to Meganco for 5 years. The lathe will be sold at the end of the contract for $10,000.

Required: Make the required journal entry on 12/31/23 and 12/31/24 assuming that the lathe is depreciated using 200% double declining balance.

DATE	ACCOUNT	DR	CR

2. Kenco is in the software development business. The company wants to purchase a new computer system that has an installed cash price of $25,000. Its current system was purchased 3 years ago for $15,000 and was being depreciated over 5 years using straight line deprecation with an estimated salvage value of $5,000.

Required: a. Assume Kenco was able to sell the old computer for $12,500 Make the required journal entry to record the sale.

DATE	ACCOUNT	DR	CR

b. Assume Kenco was able to sell the old computer for $7,000 Make the required journal entry to record the sale.

DATE	ACCOUNT	DR	CR

3. Claireco uses the allowance method to write off all bad debts. On 12/31/23 an aged accounts receivable indicated that bad debt expense would be $35,000. The balance in the Allowance account on that date was a debit of $8,000. It was also estimated that the bad debts expense for the year would be 1% of the years credit sales of $40,000,000.

Required: a. Assume that you want to inform the banking industry what your bad debt exposure will be, make the journal entry required on 12/31/23.

DATE	ACCOUNT	DR	CR

b. Assume that you want to inform the stockholders what your bad debt expense will be, make the required journal entry on 12/31/23.

DATE	ACCOUNT	DR	CR

4. Itco uses a perpetual inventory system. During the month of July the following transactions took place: 7/1 Balance: 5,000 uts. @ $6.60/ut 7/8 Purchased: 7,500 uts. @ $7.00/ut 7/12 Purchased: 8,600 uts. @ $7.20/ut 7/18 Sold 15,000 uts. for $12.00 ea. 7/20 Purchased: 7,000 uts. @ $7.60/ut 7/22 Sold 8,000 units for $12.50/ut . Required:

a. Complete the perpetual inventory record (provided) for the above transactions using FIFO

	PURCHASED	SOLD	BALANCE
DATE	UTS	COST	TOT	UTS	COST	TOT	UTS	COST	TOT

b. Make the required journal entry on 7/8.

DATE	ACCOUNT	DR	CR

c. Make the required journal entry on 7/18.

DATE	ACCOUNT	DR	CR

5. KitCO. Is a wholesaler of oak office furniture. It is an LLC company and uses the parodic inventory system to account for its inventory. On 12/31/22 the end of the company's fiscal year, the ending inventory of oak furniture was $5,450,000. The company made all of the required closing entries on that date to start the new fiscal year. During the new fiscal year starting on 1/1/23, the company had sales of $28,500,000 with $135,000 in Sales Returns and Allowances. The company purchased $13,250,000 worth of inventory during the year and had $125,000 in Purchase Returns and Allowances. On 12/31/23 the end of the current fiscal year, an inventory count of the ending inventory of the oak office furniture was made and it was found that the company had $4,875,000 worth of the oak office furniture in its ending inventory.

Required: Complete the income statement down to its Gross Profit using the information above.