Help with homework, don't understand the assignment. I need to turn it in Wednesday.

ACCT 311 - SSPRING 2016 Homework Assignment #8 1. The Blacksville Company reports sales of $500,000 in Year One, its first year in operations. Sales increased to $600,000 in Year Two and $700,000 in Year Three. The company had total reported expenses of $280,000 in Year One, $370,000 in Year Two, and $460,000 in Year Three. This company has consistently been applying the Red Method, which recognizes one particular expense as always being equal to 10 percent of sales. Assume, though, that at the very end of Year Three, company officials decide to change to the Purple Method. This method is also accepted by US GAAP but computes this same expense as simply being $62,000 each year. Blacksville is now preparing to present income statements for only Years Two and Three. After making the change, what is the beginning retained earnings reported for Year Three? Ignore income taxes. Assume no dividends are distributed. a. $436,000 b. $442,000 c. $448,000 d. $450,000 2. The Ralston Corporation buys a building on January 1, Year One for $900,000. The building has an expected useful life of 20 years along with an expected salvage value of $60,000. The straight-line method is being used but the halfyear convention is not. On June 18, Year Three, company officials come to realize that the total life for this building should have been 12 years rather than 20. In addition, they now believe there will be no salvage value. The original estimations were reasonable; they simply turned out to be incorrect. What is the book value of the building on the company's December 31, Year Three, balance sheet? a. $729,000 b. $734,400 c. $742,600 d. $748,000 3. The Raleigh Corporation buys a building on January 1, Year One for $900,000. The building is expected to last for 10 years and have no salvage value. The double-declining balance method is used for depreciation purposes. The halfyear convention is not used. Early in Year Three, company officials decide to switch to the straight-line method of depreciation. What amount of depreciation expense should the company now recognize on its Year Three income statement? a. $57,600 b. $62,400 c. $72,000 d. $90,000 4. A company uses a particular accounting method which computes an expense as $40,000 per year. The company wants to change to a different method which computes the same expense as $56,000 per year. The company is currently computing its net income for Year Four although it has been using the original method since the start of Year One. In the current year, the company is only presenting its income statements for Years Three and Four. This is not a change in depreciation methods. Which of the following is not true? Ignore any potential tax effects. a. There should be a $32,000 reduction in the beginning retained earnings reported for Year Three. b. Expense reported for Year Three should now be $56,000. c. Expense reported for Year Four should now be $56,000. d. A cumulative effect of $48,000 should be reported in the Year Four income statement. 5. The Potter Corporation has been in business for four years. The completed contract method has been used for all of those years to recognize revenue on construction projects. At the end of the fourth year, company officials decided to change to the percentage of completion method. That method increased income in the first three years by $80,000 and in Year Four by $30,000. How is this change in accounting principle reported? a. Retroactively - the reported income for the first three years is increased by $80,000. b. Currently - only the $30,000 amount for the current year is changed. c. Cumulatively - the entire $110,000 income effect is recognized in the current year. d. In the future - no changes are made until next year