1. Papas Fried Chicken bought equipment on January 2, 2013, for $39,000. The equipment was expected to remain in service for four years and to perform 11,000 fry jobs. At the end of the equipments useful life, Papas estimates that its residual value will be $6,000. The equipment performed 1,100 jobs the first year, 3,300 the second year, 4,400 the third, and 2,200 the fourth year.

Requirement: what is the depreciation and the book value per year for the equipment under the unit of production method and double-declining-balance method.

2.Assume that JR Tire Store completed the following perpetual inventory transactions for a line of tires:

May 1. Beginning merchandise inventory 16 tires @ $65 each

11 Purchase 10 tires @ $78 each

23 Sale 12 tires @ $90 each

26 Purchases 14 tires @ $80 each

29 sale 15 tires @ $90 each

Requirement:

1. Compute cost of goods sold and gross profit using the FIFO inventory costing method.
2. Compute cost of goods sold and gross profit using the LIFO inventory costing method.

Part III. Comprehensive Questions (15*2=30)

1. During the whole December, Cruisers Boat Supply has the following transactions happened. (3*6=18)

1. Dec 2, Cruisers Boat Supply Sold merchandise inventory to Walmart, $ 9200, on account. Terms 1/20, n/60. Cost of goods sold, $3500. FOB destination with the freight of $99, in cash.
2. Dec 5, Cruisers Boat Supply purchased merchandise inventory with cash, $7900. FOB destination. Freight charged 75 of cash.
3. Dec 16, Cruisers Boat Supply rent an office for its headquarter because of office renovation. The rent is paid already for $3,000 for three months.
4. Dec 17, Cruisers Boat Supply returned $1200 of the merchandise purchased on December 5.
5. Dec 21, Cruisers Boat Supply received the payment from Walmart.

2. On Dec. 31, Cruisers Boat Supply made adjusting entries according to the following information. (3*4=12)

1. In December, Cruisers Boat has delivered $5,000 of boats to its customer Costco, who prepaid 10,000 of cash in November. The cost of those boat, $2,000.
2. The salaries of Cruisers Boat to its employees of December, $5,000 will be paid in next month.
3. Depreciation of equipment for the month, $ 200
4. Office rent which as prepaid on December 16 should be recorded for December, 2015.

Part IV. Conventional Question (10)

1. Explain the difference between FIFO and LIFO. Try to indicate the different consequences if a company uses them.