1. The Rock Shop shows the following data related to an item of inventory: Inventory, January 1 100 units @ $5.00 Purchase, January 9 300 units @ $5.40 Purchase, January 19 70 units @ $6.00 Inventory, January 31 100 units Instructions: (a) What value should be assigned to the ending inventory using FIFO? (b) What value should be assigned to cost of goods sold using LIFO? 2. At 12/31/12, the end of Jenner Companys first year of business, inventory was $4,100 and $2,800 at cost and market, respectively. Following is data relative to the 12/31/13 inventory of Jenner: Original Net Net Realizable Appropriate Cost Replacement Realizable Value Less Inventory Item Per Unit Cost . Value . Normal Profit Value . A $.65 $.45 __________________________________ B .45 .40 ___________________________________ C .70 .75 ___________________________________ D .75 .65 ____________________________________ E .90 .85 ____________________________________ Selling price is $1.00/unit for all items. Disposal costs amount to 10% of selling price and a normal profit is 30% of selling price. There are 1,000 units of each item in the 12/31/13 inventory. Instructions (a) Prepare the entry at 12/31/12 necessary to implement the lower-of-cost-or-market procedure assuming Jenner uses a contra account for its balance sheet. (b) Complete the last three columns of the 12/31/13 schedule above based upon the lower-of-cost-or-market rules. (c ) Prepare the entry(ies) necessary at 12/31/13 based on the data above. (d) How are inventory losses disclosed on the income statement. 3. A machine cost $140,000, has annual depreciation expense of $28,000, and has accumulated depreciation of $70,000 on December 31, 2012. On April 1, 2013, when the machine has a fair value of $56,000, it is exchanged for a similar machine with a fair value of $168,000 and the proper amount of cash is paid. The exchange lacked commercial substance. Required: Prepare all entries that are necessary on April 1, 2013. 4. A machine which cost $300,000 is acquired on October 1, 2012. Its estimated salvage value is $30,000, and its expected life is eight years. Required: Calculate depreciation expense for 2012 and 2013 by each of the following methods, showing the figures used. (a) Double-declining balance (b) Sum-of-the-years-digits